So, after some time in under-employment I’ve finally gotten back to real employment and started thinking about my pension a bit again.
I used to contribute quite a bit, so I have some savings, but I also started contributing quite late (I worked abroad for most of my 20s, and earned not too much until my early 30s). In total, at 39 I have about £60k saved, which is okay but I understand not exceptional. I’m trying to decide what my contributions will be from here.
I’m wondering where people are at with pensions? As this is a financial/banking forum! So,a poll…
I don’t have a pension and don’t want one yet.
I don’t have a pension because I can’t afford one
I have a pension, but don’t know what’s in it because it’s all a bit complicated
I have a pension. I’m worried it’s not enough but can’t afford more.
I have a pension. I’m happy with what I’ve saved so far
0voters
And anyone else been thinking about theirs recently / gets anxiety over it / is just trying to decode the whole thing?
I lost a lot of years possible pension contributions being at home with the kids or working part time. I’ll cash in the bit I’ve got and buy lottery tickets. That’s my financial planning
Luckily mine is an NHS pension, though hardly any in the old scheme when you could retire fully at 60…they forced everyone into a new one which is state pension age. However, I know that it’s stable and I know what’s in it currently and how much I will get each year. It does however cost me a mandatory 10% per month and I pay more into that than I do tax.
I’m 33 (34 in a couple weeks - don’t forget it forum people ), and have £55,000 or so in my pension.
I pay 4% & company match that.
If I were you, I’d look how much you can willingly contribute as a %. As a minimum you should put in as much as your employer will match - if I put in 5%, my employer will still only contribute 4%.
I think when I hit 40, I’ll look to increase mine. The balance here is working out if I’ll make it to pension age given the state of this country.
This is exactly what I’m looking at! My current employer will contribute 10% if I contribute 4%. So obviously I’m going to put at least that in, but I’ll probably increase over that given what I have isn’t huge and I’m nearing the big four zero. The question is how far. I can afford larger contributions at the minute, but of course they eat into the lifestyle budget.
It’s a subject I’ve put a huge amount of research into previously, however it’s still one that gives me anxiety because ultimately there is no way to know what a contribution based pension will be worth when you retire or how much income it will give you. And also like you say, you don’t even know if you’ll ever need it and then you’d be better off just enjoying life now!
If they’re giving you 10%, if I were you, I’d stick with 4, or maybe go to 5, if it gives you some tax benefits etc - eg childcare costs etc.
The other thing to do, is to remember you can contribute to a pension separately too. So if you think you could do 10%, put the extra 6% in a high interest account and every year end put it in your pension, then you’ll get the tax benefits back etc.
There are plenty of options, one size doesn’t fit all and I don’t know your circumstances, but life is for living here and now.
33 years old. Currently pay in 6%, employer double matches so 12%. Was 5%/10% for first couple of years of my career and just shy of £100k in so far.
It’s only on the last year or two I’ve been researching what size pot you need for certain annuity values and such and I’ve been thinking of going the AVC route. Not sure there’s such a thing as putting too much in (for most of us on normal-ish salaries) so long as you can afford it in the here and now?
Obviously everyone’s circumstances, utility curves and risk appetite is personal, but my two cents:
At 39 I would pay the very maximum in that you can afford to take advantage of the tax deductibility (even more so if on a higher tax band).
From 57 you would be able to access funds and the return vs savings / non-pension investments is material. Becomes more muted if you have a significant mortgage or other debt.
But my core advice - build the spreadsheet and work out the difference for you. Sources and Uses of funds over the coming 28 years, adding in a margin for inflation and a margin for interest rate and asset return volatility. On average people put too little in pension plans and give up significant tax advantage.
Not really no! The government abolished the lifetime allowance, and anyway it was already at £1m (which in fairness, at your current rate you may have hit).
I wouldn’t bother too much with looking at annuities though to work out how much you might get, these days most people use investments / drawdown. Every time I looked at annuities, even the most pessimisstic assumptions using drawdown were better*
*pessimistic in this sense does involve living to about 100 years old, which in other contexts might be called optimism
Always thought my employers contribution was quite good, but not so sure now reading the above. Mine is 5% and employer contributes 8%. Also doesn’t get paid on bonus… maybe it can be and I just haven’t looked into it properly.
Looking at the app, it says I’ve averaged 9% return since 2016 when I started. Probably need to give it more attention.
The ‘standard’ now is probably also the minimum, which is employee pays 5% and employer 3% for a total of 8%. Anything above that is probably ‘good’ these days. Lots of employers advertise the statutory minimum as a ‘benefit’, which I think is a bit cheeky. 8% may be enough - just - for people who start this young and earn decent salaries, but will probably leave a lot of people short.
. That’s an incredible pension contribution, good on them!
), and have £55,000 or so in my pension.