Small company pension - what's the point?
Discussion
Annuity rates are a joke now. I had a private pension with Sun Alliance now Phoenix with a guaranteed annuity rate of 9%.
For years they bombarded me with offers to give it up in return for an enhanced pot.
I resisted and now get £400 a month from a £50k pot.
Just as well seeing how my wife’s final salary pension was f@cked up in 2008 by the banking crisis.
For years they bombarded me with offers to give it up in return for an enhanced pot.
I resisted and now get £400 a month from a £50k pot.
Just as well seeing how my wife’s final salary pension was f@cked up in 2008 by the banking crisis.
timbo999 said:
TTmonkey said:
It’s a pointless waste of effort. Most if us will struggle in retirement.
The only people getting comfortable out of 95% of pensions are the pension companies.
And yet the OP states that the pot in this pension is twice what he paid in... clearly all pension companies are sharks!The only people getting comfortable out of 95% of pensions are the pension companies.
TTmonkey said:
Still worthless in terms of what it will pay monthly as an income. How many people at the low end of the pension market realise they will get less than a decent meal out a month out of their pension….?
That’s because he/she didn’t pay much £ into it. The return in % terms appears to be good. So OP made the error / or choice to not put cash into pension and instead had jam today. Welshbeef said:
TTmonkey said:
Still worthless in terms of what it will pay monthly as an income. How many people at the low end of the pension market realise they will get less than a decent meal out a month out of their pension….?
That’s because he/she didn’t pay much £ into it. The return in % terms appears to be good. So OP made the error / or choice to not put cash into pension and instead had jam today. In twenty years time these people will realise it was a lie.
Welshbeef said:
That’s because he/she didn’t pay much £ into it. The return in % terms appears to be good. So OP made the error / or choice to not put cash into pension and instead had jam today.
I didn't actually need the pension at all, as I already have a couple of good DB pensions from two jobs in IT.I only joined the supermarket pension scheme to make sure I got the maximum employers' contribution - free money. I pretty much doubled my money, so I can't complain about the scheme itself. What gets me is the incredibly poor annuity rates being offered. I'd have to make it to 107 years old to even get my pot back, which just seems crazy (I know I'm ignoring inflation and indexing).
A life-long employee, working for just above minimum wage, and relying on a pension like this to supplement their basic state pension, would be severely disappointed with a monthly income of less than £250.
I took my DB pensions about 12 years ago. I've already had way more out than I paid in over the course of 28 years of employment, roughly double. I'm just shocked at the huge difference between DB pensions and DC with an annuity. No wonder most companies have closed their DB schemes.
Have they assumed that you'll take the lump sum? Are they offering any benefit to your partner?
https://www.hl.co.uk/retirement/annuities/best-buy...
Taking the lump works out at 2.36% annuity, otherwise it is a shocking rate at 1.77%
Think on the bright side, you'll not pay much tax.
https://www.hl.co.uk/retirement/annuities/best-buy...
Taking the lump works out at 2.36% annuity, otherwise it is a shocking rate at 1.77%
Think on the bright side, you'll not pay much tax.
Edited by WhiskyDisco on Tuesday 22 June 18:48
TTmonkey said:
The low paid are being told their fugues are being protected because 3% of fek all is going into a pension that will deliver fek all. Most won’t have the spare yo add more.
In twenty years time these people will realise it was a lie.
The 3% matches will move to 5% matched and then to 8% matched. In twenty years time these people will realise it was a lie.
6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
TTmonkey said:
The low paid are being told their fugues are being protected because 3% of fek all is going into a pension that will deliver fek all. Most won’t have the spare yo add more.
In twenty years time these people will realise it was a lie.
Remember it’s In twenty years time these people will realise it was a lie.
3% employee
3% employee
20% HMRC (for the lower earners)/you pay the 3% before your taxes so it’s not really 3% to you.
I agree 6% pay in a year is low - but it’s far better than zero and it’s a path. It’s going up gradually (sure individual can opt out hopefully not too many will).
Will someone earning £12k a year now expect much of a private pension - no - but state pension plus this extra will mean retirement income isn’t too different to working life income.
Welshbeef said:
Remember it’s
3% employee
3% employee
20% HMRC (for the lower earners)/you pay the 3% before your taxes so it’s not really 3% to you.
I agree 6% pay in a year is low - but it’s far better than zero and it’s a path. It’s going up gradually (sure individual can opt out hopefully not too many will).
Will someone earning £12k a year now expect much of a private pension - no - but state pension plus this extra will mean retirement income isn’t too different to working life income.
No. It's 3% Ee, 3% Er, 20% of 3% HMRC3% employee
3% employee
20% HMRC (for the lower earners)/you pay the 3% before your taxes so it’s not really 3% to you.
I agree 6% pay in a year is low - but it’s far better than zero and it’s a path. It’s going up gradually (sure individual can opt out hopefully not too many will).
Will someone earning £12k a year now expect much of a private pension - no - but state pension plus this extra will mean retirement income isn’t too different to working life income.
Welshbeef said:
The 3% matches will move to 5% matched and then to 8% matched.
6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
When is that happening? I thought we currently had 3% employee and 5% employer (i.e. 8% total). 6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
Doofus said:
WhiskyDisco said:
Doofus said:
No. It's 3% Ee, 3% Er, 20% of 3% HMRC
I think I receive the 13.8% benefit of emploers NI too. This is on both employers contribution and employees sacrifice.
And no HMRC do not pay 20% of your salary.
Welshbeef said:
Doofus said:
WhiskyDisco said:
Doofus said:
No. It's 3% Ee, 3% Er, 20% of 3% HMRC
I think I receive the 13.8% benefit of emploers NI too. This is on both employers contribution and employees sacrifice.And no HMRC do not pay 20% of your salary.
The OP has questions about pensions, and your replies aren't very clear. They may be correct in your head, but what you've written isn't.
Flooble said:
Welshbeef said:
The 3% matches will move to 5% matched and then to 8% matched.
6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
When is that happening? I thought we currently had 3% employee and 5% employer (i.e. 8% total). 6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
https://www.thepensionsregulator.gov.uk/en/employe...
Jasey_ said:
Flooble said:
Welshbeef said:
The 3% matches will move to 5% matched and then to 8% matched.
6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
When is that happening? I thought we currently had 3% employee and 5% employer (i.e. 8% total). 6-10-16% into a pension each year + the tax rebate is not to be sneered at.
For say someone earning £12k a year realistically what pension do you think they will get or could possibly get? It’s never going to be huge as even a DB pension of 40years service would only return £8k.
https://www.thepensionsregulator.gov.uk/en/employe...
TTmonkey said:
It’s a pointless waste of effort. Most if us will struggle in retirement.
The only people getting comfortable out of 95% of pensions are the pension companies.
If you struggle in retirement, it's because you didn't pay enough in to support the lifestyle you aspire to. (excluding the very occasional Mirror Group/Equitable Life calamity). I would suspect that far more than the 5% of people you claim, with private pensions, do very well out of them. And yes, the pension company make money too. Why shouldn't they, they're not running a charity. The only people getting comfortable out of 95% of pensions are the pension companies.
The big losers in pensions are the employers who make additional contributions and the govt who give back billions in tax relief.
People who complain "my pension pot is only x" need to look at what they paid in. Not what was paid in in total, by them, the employer and the govt in tax relief, but what it actually cost them.
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