100k pension pot at 42

[hlu2]

I've finally checked my pension pot and age 42 it's currently 100k. Putting into random calculators, it seems ok at current money but with inflation in 25 years time, it seems tiny. And yes I should have been keeping up with this more, but I didnt start working until I was 30 (postgrad degrees and two pregnancies) so have only had 12 years of working and saving and with two kids and a house - pensions just didnt seem all that relevant until now. How much does everyone else have around this age?

Although I do think that people with disabilities/ chronic illness should be able to claim theirs earlier, out of fairness.

@Hydrangeatea

Absolutely the power of long term investing!

Imagine if people opened one almost at birth for their DC you don't need to pay much Into it.
Just open one and have it there for them as part of their finance's...20 quid here and there , teeny bit of any bday money and just let it grow and when they are established and working hopefully they can add a little bit more...

I was told to " read the room" I am reading it.
Imagine instead of the child trust fund labour tried they did that for sipps instead all set to aggressive strategy... it would be hugely beneficial society?

These things should be normal a d part of any financial education.

Sigh ...

I understand perfectly well the sense in which you were using it. I was dissenting from that world view.

A change in perspective is healthy sometimes. When you say unfunded, you mean "without any earmarked funds to back up the liability". I argued that the earmarked funds do exist - in the form of future taxes.

I spelled it out pretty clearly, if you go back and look.

They don’t though as there are no funds “earmarked” for unfunded public sector pensions schemes from future taxes or otherwise. Thus as the cost goes up and up, the likelihood of them being subjected to cuts increases.

and you didn’t even argue that”earmarked” funds existed anyway- you just made some daft rant about “the tories”.

I once lurked on a thread where a ‘clueless poster’ asked for financial advice and the responses were so incredibly helpful. I followed the advice and watched Meaningful Money’s videos, listened to his podcasts, read his articles and I feel really on top of things now. Maven Money also good. MSE helpful but doesn’t really give much advice on investments.

It doesn’t take long to learn about all these things, they’re really straightforward for the vast majority of people and hardly anyone needs to see a financial advisor.

Well done OP for accumulating what you have and asking for advice - you could get a million in there by the time you retire.

33 & about 40k in my pension pot (also started late). I had a string of below average/average wage jobs until my latest & now putting 10-12k per year into it.

We are in the thick of mortgage and childcare years, so it isn’t a priority right now. There’s a chance a promotion will put DH slightly over the 100k threshold, so we’re going to pay some of his salary into my pension to keep it below and also offset the fact that I’m not a full FTE for childcare reasons.

A "funded pension" is one where there is a portfolio of stocks, shares, bonds, or other financial assets backing that institution's ability to pay the future pension liability.

Now ... have a think about what that actually means. It means that a fund manager has pieces of paper which gives them rights to the future profits and equity of whatever companies issued those stocks, shares or bonds. It means that the profits made by tomorrow's workers working in those companies will pay the pensions of people who buy into those funds today.

An "unfunded pension" used to mean a promise by a company to pay a pension without there being a stock, share or bond. Some companies acted as if they would be solvent and profitable forever and just issued promises to their employees today that tomorrow's workers would make enough profit to pay out on those promises and afford them a retirement. Remember Robert Maxwell? That was his schtick. Didn't end well for all the Mirror Group pensioners. But his wasn't the only company doing this, and the government at the time, led by John Major (you know ... the Tory?) passed legislation forcing companies to ringfence sufficient funds to meet their pensions liabilities. Contributed to a massive recession as companies had to find zillions to fill all those "unfunded" holes in pensions schemes.

At about the same time, right wing commentators (you know the type ... Tories) started referring to public sector pensions liabilities as "unfunded". Except .... they were never backed by the future profits of any single company, so the distinction between funded and unfunded was meaningless. Public pensions were always backed by the government and funded through General Taxation. This worked pretty well for half a century following the reforms made by Clement Attlee's (Labour) government in 1946 right up until the financial spivs (you know the ones ... Tories) screwed it all up.

Over the last twenty years, the term "unfunded public sector pension" has entered into common parlance, but it is meaningless. The teacher's pension scheme, for example, costs schools and teachers nearly 30% of each teacher's salary, which is paid to the Exchequer. In return, the government promises to pay Teacher's pensions in the future.

Now please explain how any certificate, paid for today on the stock market, issued by a company promising a share of profits tomorrow is different from a certificate, paid for today through pension contributions, issued by the government promising a share of tax revenues tomorrow? They are both promises granted to workers today of future money to be paid when they retire. They both depend on there being enough money earned by tomorrow's workers to keep those promises - and what's more, tax liabilities enjoy a senior position in any company's disbursements than dividends. There is no difference.

The only people claiming that there is a problem are people who want to big up companies and talk down government. And yes, those people are usually Tories.

A change in perspective is healthy sometimes. When you say unfunded, you mean "without any earmarked funds to back up the liability". I argued that the earmarked funds do exist - in the form of future taxes.

Well. <sigh> back to you. I've seen the projections in detail. I'm an economist. Given demographic changes there will not be sufficient future taxes to pay the amounts promised. Particularly when you have large proportions of the population who will be impoverished in old age, as you can see from this thread. This country gets poorer every year due to appalling productivity levels, and has compounded that with Brexit, and has the same ticking time bomb of demographic shift that many developed countries have to manage on top of that. Except many of them were smart enough to take some measures to mitigate this like... making state/ public pension schemes funded. So you can sigh all you like but it doesn't change the maths.

🤣🤣🤣

You really don't understand it at all do you?

How could 30% of a teacher's salary be "paid to the exchequer"? The teacher's salary is paid BY the exchequer.

When employing a teacher the exchequer quotes their package as X "pension contribution + Y. Y is made up of their take home pay Z plus tax of W. Their actual pay is only Z. No other money actually changes hands or goes anywhere at all.

X and W do not exist, except for being written on payslips. Government account will show the net cost, which os Z x how many teachers there are.

They are not paying anything towards a pension scheme. General taxation is funding the pension promises made to now-retired teachers. The promises made to the ones working now and others in unfunded public sector schemes will not be kept or will be significantly changed because they will not be affordable. That is exactly what will happen to the state pension also. In fact these processes have already begun, but will be ramped up further. This is what you get when your Government sets up ponzi schemes and everyone goes along with it as long as they're getting their payouts.

This is what you get when Tory governments set up ponzi schemes and everyone goes along with it/

FTFY.

Economist? Seems dubious. City spiv, perhaps. And if we're trading credentials, I am a trustee and a governor of a school whose teachers are all members of the TPS and none of the school's revenue comes from the exchequer. And there's thousands of similar schools. Bit of a confounding variable there, eh? Stick that in your cod-economic doomsday model and smoke it.

Then go and check the ONS own data about the size of so-called unfunded liabilities. Public sector occupational pensions in 2018 were about £1.18 trillion, but private occupational pension liabilities were £2.5 trillion and the state pension was £4.7 trillion. So public sector occupational pensions are only 1/8th of the overall liability. They won't be the reason the whole house of cards collapses.

Then go and read the Teachers' Pensions Regulations 2010. They require the Teachers' Pension Budgeting and Valuation Account to be credited with a real rate of return, which is equivalent to assuming that the balance in the Account is invested in notional investments that produce that real rate of return. If the government spends that on things you disagree with, I'm sure that's upsetting -
nut it's no different to the CEO and FD of a FTSE company allocating CAPEX and R&D to projects that don't have a positive ROI, and that happens far more frequently.

The economic incompetence of the Brexiteers and Truss and Kwarteng is staggering - I suspect we agree on that. But I am also pretty sure that many, if not most companies in the private sector will fail long before the government ceases to be capable of mobilising the police, HMRC, the courts and judiciary, and being able to raise taxes to meet its liabilities. Given the choice between relying on the promises of bankers and relying on the promises of government in my old age, I'll take government every single time. Even a Tory one.

Oh, and I almost forgot - there is already £413 billion of funded occupational pension within the government's overall liabilities as at 2018 - up by more than £80bn since 2015, as the gap is closed by the new accounting rules introduced in 2010 and 203. It will take a further twenty years to fully close this gap, but the inflection point has already been identified and there is a plan to make it work. It's really not all doom and gloom. Or rather, for those that say it is, it's a political point they are making, not an accounting fact they are stating.

Oh for goodness sake. Every Government here since the state pension was introduced in 1909 has gone along with the ponzi scheme model. None have ever suggested changing it, despite the costs of doing so and implementing a more secure, demographic-proof funded model being massively smaller in previous decades. I hate our Government for a lot of reasons, but your comments are ridiculous.

LOL! This comment really shows you have no idea what you're talking about.

Making the liability look smaller in the accounts by changing the accounting rules doesn't make it more affordable. 🤣

Then go and check the ONS own data about the size of so-called unfunded liabilities. Public sector occupational pensions in 2018 were about £1.18 trillion, but private occupational pension liabilities were £2.5 trillion and the state pension was £4.7 trillion. So public sector occupational pensions are only 1/8th of the overall liability. They won't be the reason the whole house of cards collapses.

And what assets does the Government have with which it intends to meet these liabilities?

And what are the combined assets of all of the pension funds (and associated companies in which they have shares) undelying the private schemes?

You really shouldn't make comments about this until you get a better understanding of the financial system. It's embarrassing.

Economist? Seems dubious. City spiv, perhaps. And if we're trading credentials, I am a trustee and a governor of a school

Yes, I am an economist.

You being a trustee of a school is hardly relevant your grasp of finance and economics. Your comments have really made me chuckle, thank you. I hope they're a joke and nobody actually thinks this way.

One thing you should have realised by now is that many Brits romanticise poverty. The love it and hate to see people who or out of it and trying to make sure they don't slip into it.

And what assets does the Government have with which it intends to meet these liabilities?

Glad you asked. How about "The United Kingdom of Great Britain and Northern Ireland, her dominions and overseas possessions, the territorial waters of the Atlantic Ocean, the North Sea, the English Channel, the Celtic Sea and the Irish Sea. Altogether, 242,495 sq. km of land and a population of more than 67 million people."

Keep chuckling ... I feel your embarrassment. Chuckling is a good way to hide it.

Oh, and I'm not just a trustee and governor of a school. That's just one string to my bow and I raised it simply to point out that I know a fair deal about the funding arrangements of one of the larger groups of so-called 'unfunded' public sector pensions. Oh, and to refute your ill-found earlier point about the exchequer funding all teachers.

But keep posting about how you know so much about the financial system. I like learning from the best. Tell me again how much good work you lot did for the world during the global financial crisis. (In fact, wasn't it Gordon Brown who saved the financial system from the bankers? Thank God for Labour, eh?)

You think they're going to lay public sector pensions with land? 🤣🫣

There are very many, very large, very poor countries. I don't know what point you are attempting to make, or if you're on some attempt at a wind up, or these are some strange delusions. But I think the conversation between you and I has run its course now. And is a distractions from the OP's question (sorry OP) which is about what she should do now regarding her own pension.

As I said earlier OP, I think as a ballpark you need to roughly triple the monthly contributions, that should leave you in a decent position if you also have mortgage paid off at retirement. I know it's hard with a huge mortgage - I have one like that on my own as a lone parent! - but if you can prioritise this your future self will thank you.

And actually @Mark19735 I bet I did a hell of a lot more than you did to contribute to financial stability during those crises. And I had a lot of respect for Gordon Brown actually. He was very sensible.

I think you're so wrapped up in some political rant that you'd not read many of my posts before attacking me. E.g. when I stated that I hate our Government, that Governments for decades have mismanaged everything, that Brexit has made the chronic UK productivity problem even worse. I don't support any political party: they're all useless and incompetent. Your rants about politics were really not necessary either to me or on this thread in general. Really odd as the discussion wasn't about party politics at all. It was full of useful advice, if the nasty "how dare you speak about having any savings" people were ignored. And then you started these weird party political comments when people were talking about the likely state of the economy in 20 or 30 years, when we have no idea who will be in Government. Most likely none of the parties around today. Very odd, and a complete derailment that I hope does not kill the thread entirely as it will be useful to many women. But perhaps that was your intention, to derail and shit down the discussion. I shall ignore your comments at all from now on.

Like every other mn thread, I see this one has derailed from the OP to become two payers having a toddler spat.

It was derailed earlier than that actually but still some amazingly helpful posts.

@hlu2 I appreciate you starting this post. It was the nudge I needed to do some checks on my own pension and make some changes. We don’t talk about things like this enough.

Don’t be ridiculous sqooshes

There are a wealth of experts who do post and give advice on mumsnet. If you don’t agree with advice given, it can be ignored, but there is some amazing advice to be found. Thank god for them.