Pensions

[lichtgilphead]

According to some on here (hi Reynard & other right wing nutters), I will receive a gold-plated index-linked pension that I've not paid a single penny toward. I recall them using derogatory language too!

Unfortunately, they were all unable to explain why I've paid somewhere between 6% & 7.5% every year for over 30 years. Funny that.

[Daydream]

Average pension pot in the UK is something like £38,000. It's very easy to worry about these things. My grandparents live a decent life on the state pension and their savings.

Most pension advice seems to be about 'maintaining your lifestyle' once retired, but that's seems a ridiculous notion to me. I'm prepared to cut my cloth accordingly.

[Alert Mongoose]

I always wondered what happened to the contributions you make then leave a company. Not going to be much but still.

[Granny Danger]

Average pension pot in the UK is something like £38,000. It's very easy to worry about these things. My grandparents live a decent life on the state pension and their savings.

Most pension advice seems to be about 'maintaining your lifestyle' once retired, but that's seems a ridiculous notion to me. I'm prepared to cut my cloth accordingly.

That struck me as a ridiculously low figure and a quick Google search suggests an inaccurate one. Though there is no consensus on the actual figure it appears to be higher.

Without eating into the capital and properly managed, £38,000 would net you about £1,000 per annum, £20 per week. Not a huge supplement to the state pension.

With regards to your last point, that's a fair way to look at it and a personal choice though I think most folk would hope for a retirement that's more than the state pension can offer.

[mizfit]

I think it's 5% I put in just now, can't actually remember.

Have one from my previous job set up by CITB, think they covered everything until I was qualified and it's sitting at £4000 or something. Need to try and sort that out.

[WILLIEA]

Best bit of advice I got when I left Uni was my boss at the time advising me on the importance of pension.

 

Granted I was lucky enough to be making good money when in my twenties but that advice is sure paying off now.

Edited May 18, 2016 by WILLIEA

[Grim O'Grady]

I already mentioned it in the lifestyles thread but I've already started hitting one of my work pensions, I took a VERA from work, having done 10 years up here but I've got 19 yr down south. I can hit that pension at 55 at a reduced rate or wait until I'm 60 to get the full whack.

The 10 year pen is giving me £4G per year so I'm going to do a couple of days work to tied me over, I worked for the Council so was in 1 of the better pension schemes.

Grimbo

[killienick]

When you get your annual statement you should check a few things.

 

What is your AMC? If you are paying 1% or more then you are probably paying too much as there are companies who will house a pension for 0.3%-0.4%.

 

What funds are you in? Most pensions are placed in one size fits all funds but why would a 20 year old have the same risk profile or time scale objectives as a 60 year old. If you don't want to visit a financial adviser then you should try to find a risk profiler online to gauge your understanding of investments and your tolerance to risk.

 

What are your fund charges? If the charges for your funds averages out at much more than 1% then you are being charged too much and you should move. You should also try to build a diverse portfolio which traverses all asset classes, geographies and sectors to give you diversification in your portfolio if possible.

 

Is there commission on the plan to the person who set it up? Some plans have latent commission being paid to someone you have likely never met for the privilege of having set the plan up. You can switch this off - it may be as much as 0.5%.

 

What are your time weighted and money weighted returns? i.e. are you making money or is it just your contribution that are pushing the value up?

 

The best advice if unsure would be to visit a Financial Adviser who can analyse you, your tax situation and the costs/benefits of your scheme in line with your objectives. This generally pays for itself many times over if they transfer you to a better scheme which is cheaper, better performing and more suited to your needs.

 

There are many more things to consider but the above should give you a good idea as to what your pension is really costing you and what you are getting in return.

[Ross.]

To the op: If you have started at 27 you will be in a far better place than the majority of people.

 

For me, I really should take better care. I have 14 years NI contributions in the UK and a SIPP account with a small amount in it, which will give me next to nothing in 30 years time. I bought a flat last year which I am renting out, and that should give me a little more. I contribute to whatever the state pension is over here but don't fully understand how the Swiss system works in that regard. I have managed to put away a fair bit in savings and through my work I am building up a healthy number of shares which I will sell every 3 to 5 years depending on the share price and put the cash into bonds or more property depending on what seems good value at the time.

 

If all else fails I will move back to Scotland and live off whatever I can get from Switzerland, in the hope that the currency inflation means I am loaded.

[Aladdin]

I don't pay anything into my pension which I've only had since I was 29 - luckily my employer contributes.

I have a buy to let which is my sole investment. Any dream of retiring at 50 was shattered a long time ago.

[sugna]

Try to get any adviser at all to answer the question, "How much to I need to have in my pension at retirement in order not to be destitute?"

 

Not in order to have any particularly comfortable lifestyle, just in order to continue to be able to stay in your current accommodation, assuming for example that you own it and that the mortgage has been paid-off, and to pay for food and heating.

 

If you ask them "How much do I need/should I have?", without the "destitute" qualifier, then they quite reasonably say, "It depends on what you're looking for...". But I feel that a lot of people are looking for the answer to "What do I need to have put aside, in order to survive?" basic question, and the opt-out from the more quantitative questions is still used for that fairly qualitative one.

 

Final salary schemes are as much of a glaring impossibility, on the sustainability front, as any economic recovery plans that assume a particular level of "growth". In both cases, the model is for exponential growth with respect to time being handled by higher growth in another part of the system. As George Costanza would say, "... they're all Ponzi schemes!"

[Daydream]

That struck me as a ridiculously low figure and a quick Google search suggests an inaccurate one. Though there is no consensus on the actual figure it appears to be higher.

Without eating into the capital and properly managed, £38,000 would net you about £1,000 per annum, £20 per week. Not a huge supplement to the state pension.

With regards to your last point, that's a fair way to look at it and a personal choice though I think most folk would hope for a retirement that's more than the state pension can offer.

I heard the figure on Money Box on Radio 4. I think it was meaning average in the UK taking account of the fact that a large % of the population will have no private pension.

Anybody with a private pension will surely have a bigger pot than that by retirement.

[killienick]

Try to get any adviser at all to answer the question, "How much to I need to have in my pension at retirement in order not to be destitute?"

 

Not in order to have any particularly comfortable lifestyle, just in order to continue to be able to stay in your current accommodation, assuming for example that you own it and that the mortgage has been paid-off, and to pay for food and heating.

 

If you ask them "How much do I need/should I have?", without the "destitute" qualifier, then they quite reasonably say, "It depends on what you're looking for...". But I feel that a lot of people are looking for the answer to "What do I need to have put aside, in order to survive?" basic question, and the opt-out from the more quantitative questions is still used for that fairly qualitative one.

 

Final salary schemes are as much of a glaring impossibility, on the sustainability front, as any economic recovery plans that assume a particular level of "growth". In both cases, the model is for exponential growth with respect to time being handled by higher growth in another part of the system. As George Costanza would say, "... they're all Ponzi schemes!"

 

There are some excellent Retirement Income tools out there for advisers where they can input your pension, your contributions, your savings and property etc. They then account for inflation, average growth, life expectancy and then project how long your income will last.

 

You can then tailor the tools to work out how much you should put away now in order to achieve the sum you are looking for.

[Homer Thompson]

The thread about your lifestyle got me thinking and digging out old wage slips.

I earn what I think is a decent enough wage for my age, but as I put 9% of my salary into my workplace pension, my take home wage isn't as high as others I work with.

My parents basically spent both of their working lives in the same place, paying a fair whack of their wage into their pension for retirement, and are now reaping the benefits.

It's only really been in the last couple of years that I've seriously thought about retirement (I'm 27), and realised that I probably should have been paying more attention to it, as I realise that when I get to retirement age, the state pension will probably be paltry in terms of today's money, especially if I have a private pension.

Do you have a pension? Does your employer pay into it? As I said, I currently pay 9% into it, which my employer matches. I'm a while away, but I would quite like to retire at 60 and even now I am putting the plans into place to (hopefully) be in a position to do this.

As Ross said, you'll be ahead of a lot of people paying into a pension at 27. I wish I had started paying into mine earlier than I did. I fear you're target of retiring at 60 might be a bit ambitious though, unless you're earning a fair amount of money

 

Basically anyone who doesn't have a final salary scheme (probably the majority of folk on here) are highly likely to be paying nowhere near enough into their pension. The amount of my mates who don't even know what type of pension they have is scary.

I had a final salary pension, one of the reasons I took this job, but they changed it a couple of years ago   Its now based on your earnings each year. My plan of getting a senior management job a couple of years before retirement is well and truly fucked 

 

I always wondered what happened to the contributions you make then leave a company. Not going to be much but still.

You take it with you, or at least you take the value of the pension. I have three pensions. Two private ones from previous employers and the local authority one from my current job. I had the option when I started this job of using the previous two to top up my "pot" here, but as it was at the time a final salary pension there didnt seem much point.

 

I should really go see a financial advisor about it but my rough plan is to cash in the other two for lump sums and then take the full income from my current one. Assuming I dont move employers again

[Sergeant Wilson]

A part of me thinks that by the time i'm old enough to claim my pension there will no longer be a financial system in place as the world will have been completely turned upside down by then.

Whatever system is in place, I hope to have retained enough marbles to fiddle it. If I don't I won't know the difference.

[Granny Danger]

I am very wary of 'financial advisers'.

I spoke to two recently, one who works for our solicitors and who was a waste of time and one who works for our accountants and was incredibly helpful.

Paying for a one off consultation may be worthwhile if you get the right person, but often they are just looking to take a piece of the pie on an ongoing basis for doing virtually nothing.

[Sweet Pete]

My only retirement asset currently is my home. I habitually overpay my mortgage slightly to try and bring the loan down quicker and increase my equity. Definitely need to sort a private pension out though, been meaning to for ages but never got around to it. Off to email my IFA.

[killienick]

My only retirement asset currently is my home. I habitually overpay my mortgage slightly to try and bring the loan down quicker and increase my equity. Definitely need to sort a private pension out though, been meaning to for ages but never got around to it. Off to email my IFA.

 

If you are looking for a cheap as chips option that you can set up yourself, then the L&G Stakeholder will take you 10 minutes to set up.

[killienick]

I am very wary of 'financial advisers'.

I spoke to two recently, one who works for our solicitors and who was a waste of time and one who works for our accountants and was incredibly helpful.

Paying for a one off consultation may be worthwhile if you get the right person, but often they are just looking to take a piece of the pie on an ongoing basis for doing virtually nothing.

 

Why is financial advisers in commas? Most advisers won't charge you for a consultation but you will pay a fee for advice. There has to be a proven cause and effect to justify the fee which is entirely negotiable. If you don't think the service is worth it, don't pay it.

 

ETA to say: The on-going fee also has to be justified. Were you offered a portfolio which would be monitored on-going within risk tolerances and performance expectations? Were you offered annual reviews to check if your circumstances have changed? All of this falls under the on-going fee. If you don't think that you are getting value for money you can switch this off at any time.

 

The chap who worked for your solicitor may not have been an independent financial adviser. He may have been a tied adviser which is an entirely different ball game to an IFA.

Edited May 18, 2016 by killienick

[Sweet Pete]

If you are looking for a cheap as chips option that you can set up yourself, then the L&G Stakeholder will take you 10 minutes to set up.

 

Got my guy on it now, Nick, but thanks for the suggestion. I suspect you'll know him come to think of it.