When did you really focus on your pension?

[butchstewie]

So without going into absolute detail, in terms of the "number" I need to reach to, on paper, never need to work again I'm basically there.

Approaching my 50's no debt and for the moment I enjoy my job so it's nice for it to be optional in that I could leave tomorrow and not need to worry.

Currently if I include the employer contribution around a third of my gross salary goes into my workplace pension via salary sacrifice.

Out of taxed income I usually use up my ISA allowance and still have some left over as I live reasonably frugally.

I've always had a aversion to dumping excess cash in a pension as it's locked away but as I get older I probably need to re-assess this as I arguably have "enough" for just about any scenario in very liquid investments (cash and funds) that I can realise pretty much instantly if needed to.

I'm not sure I'd want to increase salary sacrifice contributions simply because these need a bit of planning and co-ordination on my part with payroll rather than the "just get out the debit card" nature of an ISA depending exactly where I am cashflow wise i.e. it's not linear contributions.

I suppose my question after all of that is at what point did you start to prioritise paying into your pension from leftover income over other instantly accessible investment wrappers?

[Cats_pyjamas]

Age 34, putting 27% of my base salary in. 35% total contribution. However my earnings are currently skewed due to a large percentage of it being shift and overtime payments, which aren't pensionable earnings.

Aim to front load my pension contributions now, so I can reduce hours/days later. And let the compounding effect do all the heavy lifting.

However everyone's circumstances are different, the missus earns a fair income as a teacher despite working part time, so is pretty self sufficient.

[Rufus Stone]

2015 when the Chancellor of the day introduced flexi-access. Up to then, and despite working in pensions all my life, I wasn't particularly keen on a personal level. From 2015 I put in the maximum permissible each tax year. From April 2024 I stopped contributing and started drawing down the pension.

I'm currently 64.I doubt I will use it all before I die, and from 2027 it will cause an IHT issue if the government doesn't backtrack.

[Aston699]

When I hit >100k salary post 2009. Absolutely outrageous to hit a 62% marginal rate on what is a fairly average salary (for London/South East before anyone starts getting excited about national medians etc.)

Thanks to Alastair Darling, yet another absolute thieving from the labour party, not that the socialist Tories did anything about it despite their many subsequent years in power. Thieving s the lot of 'em.

[Huzzah]

Around 40, my role attracted decent bonuses.
My basic salary covered day to day living so when I received a bonus I divided it into 3.

Pension
Morgatge
Treat

[Steve H]

I was building gently but only started thrashing the savings/pension in the last ten years or so (57 now).

I’m on target and could retire pretty much any time I wanted to now.

[frank hovis]

It was around 2013 when I went from Contractor to staff and got a decent employer contribution of 16% if I put in greater than 8% , unfortunately the pension scheme did not perform as eel as could have , it’s been moved now and is much better performance

[Rick101]

Always been aware, it was one of the few things my Dad pushed me on. Contributed the base as soon as a job offered me the option. Upped to a middling amount around 35 and upped again at 45 to 24%. With some company bonus its closer to 31%

I'm in a reasonable position and live fairly frugally. Aim is to be able to reduce hours and eventually retire 58-60. State age for me is 68.

[VR99]

Early 30's....a shame I didn't realise/know earlier but better late than never and it was the realisation having less than £20k across all pensions that it needed addressing asap. Started by moving away from the default funds in my work pensions and then consolidated a couple of old ones.

There is a balance to strike subject to your personal circumstances (IMO)...it's tricky one as the tax efficiency especially at higher rate tax is unmatched but this needs to be considered with age of access and potential for future tinkering by governments.

[minimad69]

Cats_pyjamas said:

Age 34, putting 27% of my base salary in. 35% total contribution. However my earnings are currently skewed due to a large percentage of it being shift and overtime payments, which aren't pensionable earnings.

Aim to front load my pension contributions now, so I can reduce hours/days later. And let the compounding effect do all the heavy lifting.

However everyone's circumstances are different, the missus earns a fair income as a teacher despite working part time, so is pretty self sufficient.

Same position regarding base, shift and overtime. And 35 years old, only started paying attention last couple if years as started a new job where majority of department are within 5 yrs retiring.. Got it out of the default fund and starting to see some growth finally.

Currently have 19% of my base salary going in, total contribution. And hoping to slowly increase it each year.

[SV_WDC]

Whatever the answer to this, I am sure a lot of people will be investing heavily before the NI tax changes come in in a few years

[Techno9000]

butchstewie said:

....
I suppose my question after all of that is at what point did you start to prioritise paying into your pension from leftover income over other instantly accessible investment wrappers?

Early 40's when my mortgage was small and a promotion gave me some extra income, a chunk of that went into my pension.
It helped keep me in the basic tax bracket.
I'd already been paying extra since my early twenties, and overall it led to retirement at 55.

[Aston699]

To all those youngsters loading their pensions I'd say good luck, but remember to have fun as well in case you hit the graveyard before retirement. Get a V8 before it's too late..

[Ecosseven]

Early 40's. I had always paid into my workplace pension but I was fortunate enough to be promoted at 42 around the same time as having paid off the mortgage. Looked at the figures and reckoned that if I ramped up my contributions, be semi-sensible on car choices, and still allocated some money to treats, holidays, and toys, then I would have enough money to have the option to retire at mid to late 50's. This, of course, assumes that the government don't radically change the pension rules and I don't get made redundant!!

I'm currently 50 and on track. Plan is to keep my head down and work hard for the next 4-5 years and then see where I am. I may choose to drop to a 4 day week if that is an option at 55.

Currently enjoying life and mostly enjoy my job and consider myself very fortunate.

Edited by Ecosseven on Sunday 18th January 13:55

[butchstewie]

This is all good stuff but I was hoping for a bit more of a focus on when people prioritised paying into a pension specifically over other investments.

All replies welcome as threads like this might help some people think about something they'd not thought about much before but purely selfishly I was a bit more interested in the data or decisions points that might have led to that given the "locked away" element v the tax treatment on the way in and out.

[RDMcG]

Aston699 said:

To all those youngsters loading their pensions I'd say good luck, but remember to have fun as well in case you hit the graveyard before retirement. Get a V8 before it's too late..

I agree with that and did so in my forties.

However, to answer the question I never thought about pensions until I was about 40 or so and was able to have surplus income to my needs and had no mortgage or debt.

. Then it was a bit more focus on tax/investment/retirement planning although I had no intention of retiring early. This seems to me to be a key consideration. If you want to retire at ( say) 50 and live to (say) 80 with a spouse who lives for a further 10 years, then you need to think about how to finance 40 years after your last paycheque.

I worked much longer because I loved it and still has lots of fun, but of course the period of retirement that needed to be planned for was much shorter. I have zero regrets about leaving some funds behind and hope OH and son have good uses for them.

[Crumpet]

Aston699 said:

To all those youngsters loading their pensions I'd say good luck, but remember to have fun as well in case you hit the graveyard before retirement. Get a V8 before it's too late..

My parents and grandparents were (are) all very good with money but, weirdly, never really taught me anything about it. They never mentioned anything about compounding interest or pensions.

I only really found out about all that stuff when the company I work for auto-enrolled me in about 2016 (so age 31 or so). And also when I met and worked with guys still working in their 60s because they hadn t saved enough for retirement.

My plan is to really hammer this stuff home with my children.

Edited by Crumpet on Sunday 18th January 14:00

[Steve H]

butchstewie said:

This is all good stuff but I was hoping for a bit more of a focus on when people prioritised paying into a pension specifically over other investments.

All replies welcome as threads like this might help some people think about something they'd not thought about much before but purely selfishly I was a bit more interested in the data or decisions points that might have led to that given the "locked away" element v the tax treatment on the way in and out.

By the time I was saving properly from income I was close enough that locking it up wasn’t a great concern although even now I am roughly 50% Sipp, 25% Isa and the rest in cash/Gia etc.

[Phil.]

Early-40’s and mainly circumstantial. My salary increased by 50% and I salary sacrificed the whole (substantial) amount into a new SIPP for 10+ years. We could easily live on my old salary and I wanted to keep our outgoings reasonable as that would reduce the time I needed to work. Compound interest helped a lot.

We had several holidays a year with the kids (which they fondly remember) and I enjoyed my cars, still do. We didn’t buy a bigger house (could have), a good decision for us as the kids have now left home, it’s plenty big enough and we have great neighbours.

I retired 6 years ago at 55, our outgoings are still reasonable and overall our finances are fine for the lifestyle we want to lead.

[Crumpet]

butchstewie said:

This is all good stuff but I was hoping for a bit more of a focus on when people prioritised paying into a pension specifically over other investments.

All replies welcome as threads like this might help some people think about something they'd not thought about much before but purely selfishly I was a bit more interested in the data or decisions points that might have led to that given the "locked away" element v the tax treatment on the way in and out.

While my eggs aren’t quite all in one basket, my focus has been entirely on manipulating tax banding. Paying 62% and 45% beyond that is just outrageous. It’s a complete no-brainer to bag the tax relief, even at the expense of normal investments that aren’t locked away until retirement. I had even been working less to keep in a sensible band.

This year an opportunity arose to make it worthwhile paying the tax so I’ve paid less into my pension than I had been doing. I’ll probably end up spending it rather than investing it sensibly, though! In fact that’s another reason I focus on the pension as I don’t trust myself to not go ‘fk it’ and do something stupid.

But I have no idea why anyone in the basic tax bracket would contribute more than the absolute minimum to get the employer contribution - it doesn’t make sense. Just save into an ISA.