No Pension - 25, Gov looking to increase SPA to 75 HELP!!

No Pension - 25, Gov looking to increase SPA to 75 HELP!!

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Discussion

95JO

1,913 posts

85 months

Wednesday 21st August 2019
quotequote all
Can anyone shed any light on Civil Service Pensions? I was enrolled in the "Alpha" scheme paying in 5.45% of my salary for 3.5 years and struggling to find a facility to illustrate it for age 60.

SCEtoAUX

4,119 posts

80 months

Wednesday 21st August 2019
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kuro68k said:
So many young people are just not bothering with a pension, I mean why would they when the average life expectancy where they live is 71 and they won't get to use it until long after they are dead?

Plus they see their parents are living off rises in property prices, which also kept them from buying a house. Seems like the only viable plan is to buy a house, wait for it to increase in value and then downsize and pocket the rest. Why break your back for years working when you can just do that?

The contract has been broken. Pensions are broken.
House price inflation and the government interference to keep the plates spinning has been an absolute disaster for young people.

caiss4

1,865 posts

196 months

Wednesday 21st August 2019
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JulianPH said:
Cheers mate, and you illustrate this point very well. Paying the higher rate relief into an ISA to bridge an early retirement gap makes excellent sense.

I fail to understand why a higher rate taxpayer would choose to pay 40% tax on part of their earnings, rather than have this invested for their own future.
I quite agree with the sentiment but I found life got in the way. School fees of £250k+ over 10 years put paid to 'bridging' ISA's frown.

Having said that I suppose I should consider myself fortunate that I started a DB pension in 1984, another in 1996 and supplemented by a DC pension which is now a SIPP currently valued at ~£280K. I sit and reflect on that £250k plus uplift sitting in my SIPP today.....but, on balance I think it was well-invested regardless smile

BGarside

1,564 posts

136 months

Wednesday 21st August 2019
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Currently I'm aged 47 with £193k in a SIPP and £310k ISAs and non-ISA investments. I've been focussing on saving as much as possible towards retirement, but am still no closer to understanding what size of fund I would need for any given age, needing around £15-20k p.a. to live on when retired.

I love reading about these pension projections which are based on 7% annual growth, when over the last 2 years with Hargreaves-Lansdown my investments have made 0%. It feels as though all the money I save just disappears into a black hole.

Although I've since moved them to different managers the upcoming Brexit turmoil and potentially lasting effect on the UK economy, plus the possibility of a wider global recession and, in the long term, the obvious environmental unsustainability of ongoing economic growth is surely going to throw a massive spanner in the works for anyone relying on investment performance to generate a pension pot??

JulianPH

9,912 posts

113 months

Wednesday 21st August 2019
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caiss4 said:
JulianPH said:
Cheers mate, and you illustrate this point very well. Paying the higher rate relief into an ISA to bridge an early retirement gap makes excellent sense.

I fail to understand why a higher rate taxpayer would choose to pay 40% tax on part of their earnings, rather than have this invested for their own future.
I quite agree with the sentiment but I found life got in the way. School fees of £250k+ over 10 years put paid to 'bridging' ISA's frown.

Having said that I suppose I should consider myself fortunate that I started a DB pension in 1984, another in 1996 and supplemented by a DC pension which is now a SIPP currently valued at ~£280K. I sit and reflect on that £250k plus uplift sitting in my SIPP today.....but, on balance I think it was well-invested regardless smile
You are right, I should have factored in affordability.

Having said this though, I don't think you would change a thing with regard to your children (I certainly wouldn't with mine) and that is a very worthwhile investment in their future.

All the very best to you!

smile



putonghua73

615 posts

127 months

Wednesday 21st August 2019
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BGarside said:
Currently I'm aged 47 with £193k in a SIPP and £310k ISAs and non-ISA investments. I've been focussing on saving as much as possible towards retirement, but am still no closer to understanding what size of fund I would need for any given age, needing around £15-20k p.a. to live on when retired.

I love reading about these pension projections which are based on 7% annual growth, when over the last 2 years with Hargreaves-Lansdown my investments have made 0%. It feels as though all the money I save just disappears into a black hole.

Although I've since moved them to different managers the upcoming Brexit turmoil and potentially lasting effect on the UK economy, plus the possibility of a wider global recession and, in the long term, the obvious environmental unsustainability of ongoing economic growth is surely going to throw a massive spanner in the works for anyone relying on investment performance to generate a pension pot??
Congratulations! You have £503k in the pension pot. If you use a heuristic and assume 4% draw-down p/a over 30 years, you are looking at a £20,120 p/a income. I'd recommend a read of the Credit Suisse report on investment returns for 2018 (provides a look at the long-term asset return rate across various asset classes, time periods and countries). I'd also recommend reading 'Beyond 4% Rule' which discusses retirement planning in terms of risk profile and scenario based using historical data, and provides easy to understand projections of withdrawal rates based upon a 30 year period of different growth rates.

As Derek is fond - and quite right - to mention, the most significant period is the return of the 1st 10 years following retirement. This period has a dispproprionate affect on one's pension pot lasting them 30 years+. Hence, if you have the flexibility to stave retirement for a few years if you are about to retire in a period of a prolonged recession, then either hold off retirement for a few years (if possible) or have sufficient cash not to dip into your pension pot. The Dow ended 2008 almost 34% down - if you factor your investment pot down that percentage, plus whatever % that you withdraw, you have a lot less money to grow and a lot less time for your pot to recover, especially as you will be in your deaccumulation [withdrawal] period.

What is your investment vehicle with H&L that has provided 0% return over the last 24 months!?


Edited by putonghua73 on Wednesday 21st August 17:38

Slop

476 posts

220 months

Wednesday 21st August 2019
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Very interesting read, makes me really wish I'd paid more attention to pensions when I was younger ( I'm 47 ) However no point crying about it, life got in the way ( Private Schools, holidays, cars etc ) but there we go.

Due to this, I will be relying on drawdown and house downsizing in 15-20 years time. Our house is c£500k, and luckily is paid for. By the time I get to 65 I'd like to think my pension pot would be at least £250k, which coupled with downsizing to free up say a further £250k, makes in todays money £500k, I'd like to think the 4% drawdown would do it. In addition, my wife has a public sector pension which provides a smallish cash payment on retirement, followed by £10k a year for life. We're the same age.

I'd like to think that at that stage in the game £30k pa would do it - how many dinners can you eat ?

Real back of an envelope numbers here I know, the next 20 years is all about the pension. hope I'm not missing anything.....?

anonymous-user

53 months

Wednesday 21st August 2019
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Slop said:
Very interesting read, makes me really wish I'd paid more attention to pensions when I was younger ( I'm 47 ) However no point crying about it, life got in the way ( Private Schools, holidays, cars etc ) but there we go.

Due to this, I will be relying on drawdown and house downsizing in 15-20 years time. Our house is c£500k, and luckily is paid for. By the time I get to 65 I'd like to think my pension pot would be at least £250k, which coupled with downsizing to free up say a further £250k, makes in todays money £500k, I'd like to think the 4% drawdown would do it. In addition, my wife has a public sector pension which provides a smallish cash payment on retirement, followed by £10k a year for life. We're the same age.

I'd like to think that at that stage in the game £30k pa would do it - how many dinners can you eat ?

Real back of an envelope numbers here I know, the next 20 years is all about the pension. hope I'm not missing anything.....?
I think your spot-on, £30k is enough to live like a king

Fonzey

2,056 posts

126 months

Wednesday 21st August 2019
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BGarside said:
I love reading about these pension projections which are based on 7% annual growth, when over the last 2 years with Hargreaves-Lansdown my investments have made 0%. It feels as though all the money I save just disappears into a black hole.
Glad it's not just me, I'm a newbie I accept - but after 2 years my SIPP has failed to recoup the initial fee costs - so I'm currently down a couple hundred quid over two years. It peaked at about +5% growth earlier this year, which almost got me excited.


The Leaper

4,937 posts

205 months

Wednesday 21st August 2019
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So, if you think £30,000 pa is more than enough to live on after retirement, taking off the new State Basic Pension of about £8700 means that you need to have about £22,000 private pension.

£30,000 pa will reduce to about £26,500 pa after tax, say £510 pw. Do you think that this is "more than enough"? From my experience I'd say that it's possible as long as you are very frugal, but will not give you the financially comfortable retirement that you may be expecting to enjoy. Much will depend on how you plan to spend your time in retirement, particularly what is week to week living and what is exceptional beyond that.

R.

gazapc

1,319 posts

159 months

Wednesday 21st August 2019
quotequote all
I'm just 29 and just about still a lower rate tax payer (although my salary has gone up by over 60% since I started properly saving for a pension just under 5 years ago).

I pay in 5 plus employer contribution of 8.7%. Makes a nice chunk of Five hundred and something per month capital going in.

Total pot has just reached £30k. Its amazing one hand already seeing the effect of investment growth, over £5k of the pot is growth. On the other it is a long way to getting comfortably into 6 digit values.

Even so, savings probs do need to ramp up. My OH worked for 4 years in the public sector but on a salary under half of mine. Despite that, her accrued pension income is materially higher than mine from my pot over the same period...


98elise

26,376 posts

160 months

Wednesday 21st August 2019
quotequote all
BGarside said:
Currently I'm aged 47 with £193k in a SIPP and £310k ISAs and non-ISA investments. I've been focussing on saving as much as possible towards retirement, but am still no closer to understanding what size of fund I would need for any given age, needing around £15-20k p.a. to live on when retired.

I love reading about these pension projections which are based on 7% annual growth, when over the last 2 years with Hargreaves-Lansdown my investments have made 0%. It feels as though all the money I save just disappears into a black hole.

Although I've since moved them to different managers the upcoming Brexit turmoil and potentially lasting effect on the UK economy, plus the possibility of a wider global recession and, in the long term, the obvious environmental unsustainability of ongoing economic growth is surely going to throw a massive spanner in the works for anyone relying on investment performance to generate a pension pot??
What are you invested in with H&L? I've just invested with 5 of the popular Global funds (Lindsel Train, Fundsmith etc) and the growth has been excellent.

LT alone is shown 60% in the past few years.

Integroo

11,574 posts

84 months

Wednesday 21st August 2019
quotequote all
mgsontour said:
Slop said:
Very interesting read, makes me really wish I'd paid more attention to pensions when I was younger ( I'm 47 ) However no point crying about it, life got in the way ( Private Schools, holidays, cars etc ) but there we go.

Due to this, I will be relying on drawdown and house downsizing in 15-20 years time. Our house is c£500k, and luckily is paid for. By the time I get to 65 I'd like to think my pension pot would be at least £250k, which coupled with downsizing to free up say a further £250k, makes in todays money £500k, I'd like to think the 4% drawdown would do it. In addition, my wife has a public sector pension which provides a smallish cash payment on retirement, followed by £10k a year for life. We're the same age.

I'd like to think that at that stage in the game £30k pa would do it - how many dinners can you eat ?

Real back of an envelope numbers here I know, the next 20 years is all about the pension. hope I'm not missing anything.....?
I think your spot-on, £30k is enough to live like a king
Interesting thing is those that gained from the property boom will probably be okay even if their pension ain't great. Much more important for those in their twenties today to put money away in a pension as growing wealth through property growth is less likely - both because people are typically buying when older nowadays and because house price growth is unlikely to be at the levels seen over the last thirty years.

Slop

476 posts

220 months

Wednesday 21st August 2019
quotequote all
The Leaper said:
So, if you think £30,000 pa is more than enough to live on after retirement, taking off the new State Basic Pension of about £8700 means that you need to have about £22,000 private pension.

£30,000 pa will reduce to about £26,500 pa after tax, say £510 pw. Do you think that this is "more than enough"? From my experience I'd say that it's possible as long as you are very frugal, but will not give you the financially comfortable retirement that you may be expecting to enjoy. Much will depend on how you plan to spend your time in retirement, particularly what is week to week living and what is exceptional beyond that.

R.
There is that, although my very rough calculations to get to £30k gross did not include the State Pension ( which I forgot about....!)
I guess whether there will be a State Pension in say 15 years time is another question, but I'd hope there will still be something.

red_slr

17,122 posts

188 months

Wednesday 21st August 2019
quotequote all
If you read a lot of the retirement forums the often quoted figure of £2k PCM / £24k a year is considered a good base line income that allows for some travel, hobbies etc. (edit to add based on a couple, after tax, assuming no mortgage)

I would certainly be happy with that and I think other than long haul travel you could easily have a very pleasant retirement with that kind of money.



Edited by red_slr on Wednesday 21st August 22:52

Integroo

11,574 posts

84 months

Wednesday 21st August 2019
quotequote all
red_slr said:
If you read a lot of the retirement forums the often quoted figure of £2k PCM / £24k a year is considered a good base line income that allows for some travel, hobbies etc.

I would certainly be happy with that and I think other than long haul travel you could easily have a very pleasant retirement with that kind of money.

Indeed, certainly if there are two of you with that.

red_slr

17,122 posts

188 months

Wednesday 21st August 2019
quotequote all
Integroo said:
Indeed, certainly if there are two of you with that.
That would be nice! But no its usually quoted for a couple. The only snag is in 30 years that 2k a month is more like £4k a month due to inflation.. yikes.

chip*

1,005 posts

227 months

Wednesday 21st August 2019
quotequote all
BGarside said:
Currently I'm aged 47 with £193k in a SIPP and £310k ISAs and non-ISA investments. I've been focussing on saving as much as possible towards retirement, but am still no closer to understanding what size of fund I would need for any given age, needing around £15-20k p.a. to live on when retired.
Well done, you are in an excellent position with your current savings. Re: what size fund required for retirement. You need to question yourself 1) when you wish to retire 2) what type of lifestyle you wish to lead, as these will determine your retirement pot.

I pondered over those same questions myself a few years back. Had to consider various factors, but most importantly the numbers stacked up. In the end it was a no-brainer to retire at 47. Probably too early for some, but at least I have the opportunity to enjoy bringing up my 2 girls and lead an active life before my body fall apart!

CoolHands

18,496 posts

194 months

Wednesday 21st August 2019
quotequote all
I think the government are fking wkers screwing with the pensions. Proposing 75 is a pisstake. And then pinning private pensions to 10 years prior to that?! Cocksuckers

I work in education and trying to convince young teachers not to opt out the pension scheme(!!) is a losing battle frown and that’s a bloody good pension scheme, obvs. Suggesting what they’re suggesting is just killing it.

Croutons

9,807 posts

165 months

Thursday 22nd August 2019
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95JO said:
Can anyone shed any light on Civil Service Pensions? I was enrolled in the "Alpha" scheme paying in 5.45% of my salary for 3.5 years and struggling to find a facility to illustrate it for age 60.
You really couldn't google https://www.civilservicepensionscheme.org.uk ?

It's going to pay out at state pension age, unless you want to take a hit for every one of the 8 (or 15!) years between age 60 and that.