Typical pension funds?
Discussion
A bit long-winded but here goes....
I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
cpas said:
A bit long-winded but here goes....
I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
You'd be making life difficult for yourself by saving after you've paid tax rather than being able to benefit from growing the full amount. Pensions and savings aren't really equivalents, paying higher amounts into a pension can generate a far better return than just saving. If the guy you know only gets £4500pa, chances are he didn't pay much into his pension fund...and the likelihood is he'd be getting far less if he'd just saved it.I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
cpas said:
A bit long-winded but here goes....
I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
Well I physically pay in (Gross) c£600pcm, so on my contributions alone my pot would be growing at £7.2k per annum so over the 40 years my contributions would mean the pot is £288k.I was listening to the radio the other day and an 'expert' was saying that the average pension for private sector workers is arout £3500pa above the state pension. This got me thinking if this is actually true and how this compares to typical monthly pension contributions of somebody who is on an 'avarage' wage (£25,000pa or so). Does anyone know anyone who's recently retired and how much pension they're getting compared with slary and contributions. I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension. This doesn't seem all that much to me for someone who's paid in for 40 years!! I'm too old now to start paying a pension, but £3500 a year for 20 years after I retire 'only' anounts to £70k which I could probably save by then anyway.
But add in company contributions which for me would be cx3 so my pot over 40 years would be worth £1,152,000. Given you need a £500k pot to buy a £25k salary if I did cover 40 years at these rates I'd be looking 50-55k
cpas said:
I know a train driver who retired a few years ago from a £30k salary and had worked for the railway all his life and now gets about £4,500pa as a pension.
Something very seriously amiss there - his pension should be excellent working for an ex-public body. Maybe he opted out and only joined late on?Well, following on from the public sector final salary pension thread, as an idea:
A 1/60ths scheme (where you receive a pension of 1/60th of your salary for each year of service) with a retirement age of 60 and the pension increasing at inflation, would require contributions of around 40% per annum every year for 40 years (hence why public sector pensions are 'gold-plated', given the contributions paid, but that is for another thread!) (around 25%-30% for a level pension).
Obviously, if you are paying into a defined contribution scheme then the actual pension you will receive would depend on your fund value at retirement (i.e. investment growth) and annuity rates at retirement (dependent on interest rates and expected longevity).
However on the basis above, if you made contributions of say 10% of gross salary per annum then that would probably buy you a level pension of somewhere around 1/3rd of your final salary.
Sidicks
A 1/60ths scheme (where you receive a pension of 1/60th of your salary for each year of service) with a retirement age of 60 and the pension increasing at inflation, would require contributions of around 40% per annum every year for 40 years (hence why public sector pensions are 'gold-plated', given the contributions paid, but that is for another thread!) (around 25%-30% for a level pension).
Obviously, if you are paying into a defined contribution scheme then the actual pension you will receive would depend on your fund value at retirement (i.e. investment growth) and annuity rates at retirement (dependent on interest rates and expected longevity).
However on the basis above, if you made contributions of say 10% of gross salary per annum then that would probably buy you a level pension of somewhere around 1/3rd of your final salary.
Sidicks
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