How is my pension performing? - 1st 5 years?
Discussion
Have been with my current employers for 5 years now, screenshot above showing my current pension pot.
I don't make any contributions myself, which I am comfortable with, at the moment.
I am 42, and probably expect to work for another 25 years. That's the plan.
Understand that pension planning, is unpredictable, but is calculation below correct, assuming same level of performance for 25 years, as the past 5 years?:
Pot is worth £4300 more than contributions, amounting to a 25% increase in 5 years, so 5% growth a year?
Erudite geezer said:
Have been with my current employers for 5 years now, screenshot above showing my current pension pot.
I don't make any contributions myself, which I am comfortable with, at the moment.
I am 42, and probably expect to work for another 25 years. That's the plan.
Understand that pension planning, is unpredictable, but is calculation below correct, assuming same level of performance for 25 years, as the past 5 years?:
Pot is worth £4300 more than contributions, amounting to a 25% increase in 5 years, so 5% growth a year?
Also, you've not told us what you are invested in and hence how much risk has been taken, so no-one can possibly suggest whether the investment performance has been good or bad!
Edited by sidicks on Tuesday 27th March 22:32
It would appear that your employer is putting roughly £3500 into your pension each year?
The standard 'rule of thumb' is you need half your age as a percentage of your salary going into your pension every year (the poster above may have a better view!)... so at your stated age 21%.
Only you can say if you feel the contribution rate is high enough, but I'm guessing not...
The standard 'rule of thumb' is you need half your age as a percentage of your salary going into your pension every year (the poster above may have a better view!)... so at your stated age 21%.
Only you can say if you feel the contribution rate is high enough, but I'm guessing not...
Following with interest.
OP- Is this your only pension? What were you doing about retirement planning before taking this pension? You say you are comfortable with not contributing - when are you thinking of starting contributing?
I'm a similar age to you (a few years younger) and I have been paying in the minimum required amounts (~5%) until a couple of years ago when I ramped up my contributions significantly (~20%). I'm a bit panicked about how much I need to save before retirement.
Pensions is one of those areas that people don't talk about so it's interesting to see what others are doing and what their plans are.
OP- Is this your only pension? What were you doing about retirement planning before taking this pension? You say you are comfortable with not contributing - when are you thinking of starting contributing?
I'm a similar age to you (a few years younger) and I have been paying in the minimum required amounts (~5%) until a couple of years ago when I ramped up my contributions significantly (~20%). I'm a bit panicked about how much I need to save before retirement.
Pensions is one of those areas that people don't talk about so it's interesting to see what others are doing and what their plans are.
Well, to answer OPs question directly:
assuming the employer pays in a flat monthly rate that would be £277 per month. If he's got to £21,762 in 63 months, then he's earning 0.67% compounded monthly. Project that forward 25 years to March 2043 and it's worth £428k. You could keep that in a DGF during drawdown and pull 5% a year off that without touching the capital, so £21k per year. If you also drew it down to zero over a 30 year retirement and you could take £26,920. I only compounded that annually because I got bored.
To do it better we'd have to factor in some inflation assumption, but more importantly wage growth which presumably will lead your employer to pay more. Plus you could put some money in, because it's very tax efficient, ie, you pay no tax on pension contributions. So if you have any 40% taxable income that's a prime target for paying into a pension, because you only lose £60 in your pay packet for every £100 going into the pension. In fact only £48 if your employer uses salary sacrifice.
assuming the employer pays in a flat monthly rate that would be £277 per month. If he's got to £21,762 in 63 months, then he's earning 0.67% compounded monthly. Project that forward 25 years to March 2043 and it's worth £428k. You could keep that in a DGF during drawdown and pull 5% a year off that without touching the capital, so £21k per year. If you also drew it down to zero over a 30 year retirement and you could take £26,920. I only compounded that annually because I got bored.
To do it better we'd have to factor in some inflation assumption, but more importantly wage growth which presumably will lead your employer to pay more. Plus you could put some money in, because it's very tax efficient, ie, you pay no tax on pension contributions. So if you have any 40% taxable income that's a prime target for paying into a pension, because you only lose £60 in your pay packet for every £100 going into the pension. In fact only £48 if your employer uses salary sacrifice.
Edited by otherman on Tuesday 27th March 22:58
My employer pays in 7.5% every month of my salary. This year's contributions from them will be £353 per month.......currently zero contribution from my side.
Everyone has different financial situation and retirement plans.....I am now mortgage and debt-free, with 4 of us (2 kids aged 3 and 5) having the maximum premium bond holdings, although these returns are pitiful, at around £200/ month average.
There is also a classic car, which has tripled in value in the 12 years I have had it, although this is not considered an investment.
Could start making contributions to penison myself......if someone could help with the maths....although if otherman's figures of £428,000 are plausible, I am thinking why contribute?
Never really bothered with thinking about the pension too much, as the expectation has always been that of a comfortable retirement......cash savings, pension pot and option to release equity from a larger house.
Will find out what type of investments SW are making......I believe I instructed them to play it safe/ conservative 5 years ago.......never contacted them since.
Everyone has different financial situation and retirement plans.....I am now mortgage and debt-free, with 4 of us (2 kids aged 3 and 5) having the maximum premium bond holdings, although these returns are pitiful, at around £200/ month average.
There is also a classic car, which has tripled in value in the 12 years I have had it, although this is not considered an investment.
Could start making contributions to penison myself......if someone could help with the maths....although if otherman's figures of £428,000 are plausible, I am thinking why contribute?
Never really bothered with thinking about the pension too much, as the expectation has always been that of a comfortable retirement......cash savings, pension pot and option to release equity from a larger house.
Will find out what type of investments SW are making......I believe I instructed them to play it safe/ conservative 5 years ago.......never contacted them since.
Good luck with the comfortable retirement if that's your only provision.
I've put that much into a separate pension over the last 5 years as a monthly contribution and don't even think about it as a pension contribution as its so small.
(Most of my pension contributions have come from direct payments from my Ltd company)
I've put that much into a separate pension over the last 5 years as a monthly contribution and don't even think about it as a pension contribution as its so small.
(Most of my pension contributions have come from direct payments from my Ltd company)
Erudite geezer said:
My employer pays in 7.5% every month of my salary. This year's contributions from them will be £353 per month.......currently zero contribution from my side.
Everyone has different financial situation and retirement plans.....I am now mortgage and debt-free, with 4 of us (2 kids aged 3 and 5) having the maximum premium bond holdings, although these returns are pitiful, at around £200/ month average.
There is also a classic car, which has tripled in value in the 12 years I have had it, although this is not considered an investment.
Could start making contributions to penison myself......if someone could help with the maths....although if otherman's figures of £428,000 are plausible, I am thinking why contribute?
Never really bothered with thinking about the pension too much, as the expectation has always been that of a comfortable retirement......cash savings, pension pot and option to release equity from a larger house.
Will find out what type of investments SW are making......I believe I instructed them to play it safe/ conservative 5 years ago.......never contacted them since.
£428k may sound like a lot, but it’s is actually only £10-12k plus inflation, if you need to have this amount guaranteed.Everyone has different financial situation and retirement plans.....I am now mortgage and debt-free, with 4 of us (2 kids aged 3 and 5) having the maximum premium bond holdings, although these returns are pitiful, at around £200/ month average.
There is also a classic car, which has tripled in value in the 12 years I have had it, although this is not considered an investment.
Could start making contributions to penison myself......if someone could help with the maths....although if otherman's figures of £428,000 are plausible, I am thinking why contribute?
Never really bothered with thinking about the pension too much, as the expectation has always been that of a comfortable retirement......cash savings, pension pot and option to release equity from a larger house.
Will find out what type of investments SW are making......I believe I instructed them to play it safe/ conservative 5 years ago.......never contacted them since.
Erudite Geezer; I estimate your annual salary at £56480 [£353 / 0.075 x 12]. You won't be getting full Child Benefit at that level and you say you have two young children. Also, you're paying tax at 40%. You also have substantial risk free assets, i.e. your home and your savings.
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Edited by Brave Fart on Wednesday 28th March 09:14
Brave Fart said:
Erudite Geezer; I estimate your annual salary at £56480 [£353 / 0.075 x 12]. You won't be getting full Child Benefit at that level and you say you have two young children. Also, you're paying tax at 40%. You also have substantial risk free assets, i.e. your home and your savings.
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Job jobbedContributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Edited by Brave Fart on Wednesday 28th March 09:14
Brave Fart said:
Erudite Geezer; I estimate your annual salary at £56480 [£353 / 0.075 x 12]. You won't be getting full Child Benefit at that level and you say you have two young children. Also, you're paying tax at 40%. You also have substantial risk free assets, i.e. your home and your savings.
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Brave Fart said:
Erudite Geezer; I estimate your annual salary at £56480 [£353 / 0.075 x 12]. You won't be getting full Child Benefit at that level and you say you have two young children. Also, you're paying tax at 40%. You also have substantial risk free assets, i.e. your home and your savings.
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Or to put it another way, the OP will get tax relief to the tune of up to 74%Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Edited by Brave Fart on Wednesday 28th March 09:14
74%!!!!
OP - you could get another £614 added to your pension each month for just a loss of £216 take home pay per month.
oyster said:
Brave Fart said:
Erudite Geezer; I estimate your annual salary at £56480 [£353 / 0.075 x 12]. You won't be getting full Child Benefit at that level and you say you have two young children. Also, you're paying tax at 40%. You also have substantial risk free assets, i.e. your home and your savings.
Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Or to put it another way, the OP will get tax relief to the tune of up to 74%Contributing to your pension fund is a no-brainer, in my view, if only for the tax benefits and Child Benefit.
Adding £6480 to your pension will boost your pension by £10800, and you'll get child benefit of around £1159 per year that you'd otherwise lose [£1789 x 64.8%].
Edited by Brave Fart on Wednesday 28th March 09:14
74%!!!!
OP - you could get another £614 added to your pension each month for just a loss of £216 take home pay per month.
The difference between the £614 potentially added to your pension and the £216 you'd lose in take home pay - the difference of £398 every single month. Guess who will receive that????
The Treasury.
So your family could have that money, or the Government could have it.
You decide.
Oyster.....you are providing some pearls 
of wisdom.
Is there a particular amount each month I should be contributing to maximize tax efficiencies?
And I am confused with the child benefit payments, what is the relationship to the pension plan?......I stopped those child benefit payments last year as my salary exceeded £50,000, but still has not hit £60,000.
of wisdom.Is there a particular amount each month I should be contributing to maximize tax efficiencies?
And I am confused with the child benefit payments, what is the relationship to the pension plan?......I stopped those child benefit payments last year as my salary exceeded £50,000, but still has not hit £60,000.
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