Sorting my pensions out - planning at 39
Discussion
I'm 39 and have 3 pension 'pots', 2 from old employers and 1 from my current - looking at my 'projections' is somewhat sobering as I assumed I'd be reasonably well covered, having paid in to a pension for most of my adult life - it seems like I'm on track for about £13k a year though!
Currently, I pay a little under £700 a month into my current employer's pension, which includes their contribution. I pay the maximum amount in which they will match.
My old company pensions (HSBC and Standard Life) are sat dormant - I no longer contribute anything to them. They are both defined contribution pensions and have seen a little growth lately, but nothing groundbreaking. They only give me a very limited choice of funds, but I understand the fees are quite low on the Standard Life Pension, and 1% on the HSBC (which seems high). I'm stuck with my current (L&G) pension.
So, at 39 I'm panicking a little about having enough money when I'm old and grey(er), so have a few questions on my pensions:
Should I combine the HSBC and Standard Life pensions into something more controllable (Hargreaves Lansdown SIPP or similar)?
Should I combine all of my pensions into the current company one (L&G SIPP)?
I wondered about paying more into a pension, but I think I'm better off ploughing money into an investment ISA as I can at least access it if I need to. I'm not a great saver though to be honest.
My total pot isn't massive - about £100k - so I have some work to do! I don't intend my pension to be my only retirement income/investment - but it needs to form a core of it.
Luckily my Mrs has a decent work pension too (although a smaller 'pot') but having stayed at the same company all of her career so far means she doesn't have the need to change providers. We both aim to have about 28 years until retirement (I'm older than her so will plough on until 67 and she will retire at 55). We're both in professional roles, so will probably end up doing some kind of part time advisory/contracting roles rather than fully retire.
It would be nice to build up a reasonable 'pot' between us, then do something a little more property based with it - can SIPPs be combined to invest in commercial property?
Currently, I pay a little under £700 a month into my current employer's pension, which includes their contribution. I pay the maximum amount in which they will match.
My old company pensions (HSBC and Standard Life) are sat dormant - I no longer contribute anything to them. They are both defined contribution pensions and have seen a little growth lately, but nothing groundbreaking. They only give me a very limited choice of funds, but I understand the fees are quite low on the Standard Life Pension, and 1% on the HSBC (which seems high). I'm stuck with my current (L&G) pension.
So, at 39 I'm panicking a little about having enough money when I'm old and grey(er), so have a few questions on my pensions:
Should I combine the HSBC and Standard Life pensions into something more controllable (Hargreaves Lansdown SIPP or similar)?
Should I combine all of my pensions into the current company one (L&G SIPP)?
I wondered about paying more into a pension, but I think I'm better off ploughing money into an investment ISA as I can at least access it if I need to. I'm not a great saver though to be honest.
My total pot isn't massive - about £100k - so I have some work to do! I don't intend my pension to be my only retirement income/investment - but it needs to form a core of it.
Luckily my Mrs has a decent work pension too (although a smaller 'pot') but having stayed at the same company all of her career so far means she doesn't have the need to change providers. We both aim to have about 28 years until retirement (I'm older than her so will plough on until 67 and she will retire at 55). We're both in professional roles, so will probably end up doing some kind of part time advisory/contracting roles rather than fully retire.
It would be nice to build up a reasonable 'pot' between us, then do something a little more property based with it - can SIPPs be combined to invest in commercial property?
In the absence of any other replies...
Don't forget the state pension.
Don't forget that pension contributions get tax relief and, if your employer does salary sacrifice, NI relief as well. If you're a higher rate tax payer then the tax relief makes it much more worthwhile than an ISA. Bear in mind that higher rate tax relief on pension contributions continue to be under threat.
You can start withdrawing from your pension pots at age 55.
But this is the mechanics....what you really need to consider is...what are requirements for retirement lifestyle and when should it start.
Work this out first and that will tell you what you need to do to achieve it - you can then find the best balance. A good financial advisor / planner will help you with this.
You can do it yourself and it's rewarding but it's also very time-consuming and risky.
Don't forget the state pension.
Don't forget that pension contributions get tax relief and, if your employer does salary sacrifice, NI relief as well. If you're a higher rate tax payer then the tax relief makes it much more worthwhile than an ISA. Bear in mind that higher rate tax relief on pension contributions continue to be under threat.
You can start withdrawing from your pension pots at age 55.
But this is the mechanics....what you really need to consider is...what are requirements for retirement lifestyle and when should it start.
Work this out first and that will tell you what you need to do to achieve it - you can then find the best balance. A good financial advisor / planner will help you with this.
You can do it yourself and it's rewarding but it's also very time-consuming and risky.
Maxf said:
Should I combine all of my pensions into the current company one (L&G SIPP)?
It would be nice to build up a reasonable 'pot' between us, then do something a little more property based with it - can SIPPs be combined to invest in commercial property?
I'm sure someone will tell me if I'm wrong but how can your company pension also be a SIPP (unless you're a one man band ltd company). Do you mean you have a SIPP as well as the company pension, or just that your employer is making contributions to your SIPP?It would be nice to build up a reasonable 'pot' between us, then do something a little more property based with it - can SIPPs be combined to invest in commercial property?
I'm a similar age to you and you are in a much, much stronger position than me by the sound of it.
Is your 13k projection inflation adjusted - are they saying you should (or might) get the future equivalent of 13k today, or just 13k in 28 years?
Comes down to how you want to live in retirement. If you're mortgage & rent free by then, you could live in relative comfort, and it sounds like between you, you'll have at least double that to live on.
mjb1 said:
I'm sure someone will tell me if I'm wrong but how can your company pension also be a SIPP (unless you're a one man band ltd company). Do you mean you have a SIPP as well as the company pension, or just that your employer is making contributions to your SIPP?
The Owners can have multiple SIPPS under an umbrella into which the Company can pay contributions.I'm a little older. My approached is a balanced one.
- Making additional pension contributions now to benefit form the immediate tax breaks
- I'm also building a S&S ISA portfolio, the benefits of which are all future gains/cap gains will be free of tax
- Investment property
Given the government can and do/will meddle with all three of the above I prefer to spread my bets and allocate my resources to a spread of the 3.
- Making additional pension contributions now to benefit form the immediate tax breaks
- I'm also building a S&S ISA portfolio, the benefits of which are all future gains/cap gains will be free of tax
- Investment property
Given the government can and do/will meddle with all three of the above I prefer to spread my bets and allocate my resources to a spread of the 3.
mjb1 said:
I'm sure someone will tell me if I'm wrong but how can your company pension also be a SIPP (unless you're a one man band ltd company). Do you mean you have a SIPP as well as the company pension, or just that your employer is making contributions to your SIPP?
I'm a similar age to you and you are in a much, much stronger position than me by the sound of it.
Is your 13k projection inflation adjusted - are they saying you should (or might) get the future equivalent of 13k today, or just 13k in 28 years?
Comes down to how you want to live in retirement. If you're mortgage & rent free by then, you could live in relative comfort, and it sounds like between you, you'll have at least double that to live on.
It's a 'group SIPP' which may be something different?I'm a similar age to you and you are in a much, much stronger position than me by the sound of it.
Is your 13k projection inflation adjusted - are they saying you should (or might) get the future equivalent of 13k today, or just 13k in 28 years?
Comes down to how you want to live in retirement. If you're mortgage & rent free by then, you could live in relative comfort, and it sounds like between you, you'll have at least double that to live on.
I assume the £13k is inflation adjusted! I hope so anyway.
I would hope to be mortgage free by then - although kids may need a leg up, so I suspect I'll still have some outgoings other than bingo and cruises.
RizzoTheRat said:
LeoSayer said:
Don't forget the state pension.
Being only a few years older than the OP, I'm not holding out a lot of hope for the state pension still existing by the time we get there.I'm in a very similar position to the OP so interested to see what people suggest.
You've got £1400 per month going into a pension pot. Your lovely missus has the same presumably.
Your pot alone is worth over £1M.
I don't understand why you people worry about investments etc. You have a good pension pot, you can take £250K on retirement.
If your so worried, you should keep her on until she's 67 too; less supple then, less likely to have an affair when your 'consulting'
Your pot alone is worth over £1M.
I don't understand why you people worry about investments etc. You have a good pension pot, you can take £250K on retirement.
If your so worried, you should keep her on until she's 67 too; less supple then, less likely to have an affair when your 'consulting'
Maxf said:
Should I combine the HSBC and Standard Life pensions into something more controllable (Hargreaves Lansdown SIPP or similar)?
Should I combine all of my pensions into the current company one (L&G SIPP)?
I wondered about paying more into a pension, but I think I'm better off ploughing money into an investment ISA as I can at least access it if I need to. I'm not a great saver though to be honest.
I'm a big fan of,Should I combine all of my pensions into the current company one (L&G SIPP)?
I wondered about paying more into a pension, but I think I'm better off ploughing money into an investment ISA as I can at least access it if I need to. I'm not a great saver though to be honest.
- Consolidating pensions into one place so they are easier to manage, and
- Pocketing 40% tax relief while you can.
Sparkzz said:
You've got £1400 per month going into a pension pot. Your lovely missus has the same presumably.
Your pot alone is worth over £1M.
I don't understand why you people worry about investments etc. You have a good pension pot, you can take £250K on retirement.
If your so worried, you should keep her on until she's 67 too; less supple then, less likely to have an affair when your 'consulting'
Nah, it's £700 a month all in. The Mrs has a similar amount.Your pot alone is worth over £1M.
I don't understand why you people worry about investments etc. You have a good pension pot, you can take £250K on retirement.
If your so worried, you should keep her on until she's 67 too; less supple then, less likely to have an affair when your 'consulting'
I definitely havent got £1m - more like £100k. A quick Excel with 3% growth pa and some assumed pay increases shows it could be worth £700k.
That's a good plan... keep her working and bringing in the £, while I play golf. Best advice on the thread
Maxf said:
Nah, it's £700 a month all in. The Mrs has a similar amount.
I definitely havent got £1m - more like £100k. A quick Excel with 3% growth pa and some assumed pay increases shows it could be worth £700k.
Also remember that you don't need to buy an annuity anymore. There are other options to consider.I definitely havent got £1m - more like £100k. A quick Excel with 3% growth pa and some assumed pay increases shows it could be worth £700k.
Sparkzz said:
You've got £1400 per month going into a pension pot. Your lovely missus has the same presumably.
Your pot alone is worth over £1M.
www.specsavers.co.ukYour pot alone is worth over £1M.
Very interested in views on this too.
I have two pensions (one live and one dead) and have a similar amount in and similar age to the OP. My projections are similar for when I reach 67. Although I am not putting in £700 per month more like £450. I am a higher rate earner too. Currently wanting to pay off mortgage in next six years or so whilst interest rates are low - so extra cash going into that at the moment.
What are the other options come retirement age other than annuities?
Sorry for the thread hijack....
I have two pensions (one live and one dead) and have a similar amount in and similar age to the OP. My projections are similar for when I reach 67. Although I am not putting in £700 per month more like £450. I am a higher rate earner too. Currently wanting to pay off mortgage in next six years or so whilst interest rates are low - so extra cash going into that at the moment.
What are the other options come retirement age other than annuities?
Sorry for the thread hijack....
mike9009 said:
Very interested in views on this too.
What are the other options come retirement age other than annuities?
I'm no means an expert but after the initial 25% tax-free can you simply not drawdown as and when required? i.e if your pot is worth £500k you could take £125k then the remainder at say 15-20kyr. And if state pension is still around that will top it up by another £8kyr. Plenty of time for the goal posts to move until you retire though... What are the other options come retirement age other than annuities?
mike9009 said:
I am a higher rate earner too. Currently wanting to pay off mortgage in next six years or so whilst interest rates are low - so extra cash going into that at the moment.
Apologies for the partial quote but I don't think it removes context.I'm always surprised that people do this. I know the great PH truism is that one should pay off mortgage debt as quickly as possible but, to me, low interest rates mean it's an absolute no brainer to look for yield (or read: saved interest) elsewhere and there really aren't any better options for higher rate tax payers than putting money into a pension (as long as the underlying investment approach is sound). Especially given the less than rosy outlook for pension tax relief.
Obviously some liquidity is beneficial, of course- all things in moderation.
mike9009 said:
Very interested in views on this too.
You'll certainly get that, some insightful ones too.But the reality is unless you get a decent INDEPENDENT financial adviser to look at your situation holistically and the finer detail of your existing policies then you're applying fag packet logic to your future income sustainability.
It takes time and expertise to conduct whole-of-market reviews of multiple policies and yes it does cost a bit in fees too!
I'm not sure about consolidation pensions
1. Clearly if they are final salary don't do it
2. Clearly if they are career average don't do it.
3. What is the transfer fee - some are eye watering to the point it would be pure madness to move. So check out all the costs and double check with their verification in writing
1. Clearly if they are final salary don't do it
2. Clearly if they are career average don't do it.
3. What is the transfer fee - some are eye watering to the point it would be pure madness to move. So check out all the costs and double check with their verification in writing
mike9009 said:
What are the other options come retirement age other than annuities?
Sorry for the thread hijack....
Purely personal opinion:Sorry for the thread hijack....
- Annuities are shocking value for money at present. They may still be appropriate for some people, but not many.
- Income drawdown from a SIPP is the workable alternative.
Which is better in the long run? By the time you find out it will be too late to do anything about it....
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