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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Aibu to think my pension pot of 7k is totally pointless

27 replies

readyforbeddy · 08/04/2019 19:26

Apparently my pension pot is 7k. I've had this pension a long time. I'm 40. I'm going broadly estimate that if it carries on like this, I'll be lucky to get an income of £7 a month. Ok I could pay in more, but I'm not earning a lot.

I actually transferred another pension into this one, so I'm doomed really. AIBU to think it's pretty pointless for us mortals on a low income, with not much financial clue to even try. And I don't save either, as I have a massive mortgage as live in the SE. But I'm not that close to London to get cheaper house prices but it costs a fortune to commute. Confused

OP posts:
mummyhaschangedhername · 08/04/2019 19:32

You still have at least 20 more years. Do you mean a total pot of 7k or 7k a year?

acciocat · 08/04/2019 19:33

Move? If you’re on a lower income then presumably it’s a job that isn’t restricted to the London area? You need to get in a position to Chuck a shed load more into your pension each month because you’re right, 7k won’t touch the sides

Popc0rn · 08/04/2019 19:36

If you're 40 you've still got 28 years to build up your pension, how much do you pay in a month/how much does your employer pay in?

I'd consider seeing a financial adviser or having a look on the Martin Lewis website about what would be best for you. Could you overpay your mortgage if you've got any spare cash at the end of the month?

S1lverB1rchW7 · 08/04/2019 19:42

If you are in UK you need 35 years of NI contributions to claim full state pension. This is currently approx 8k per year to pay all your bills. You can check how much you have paid into your state pension on www.gov.uk
Which is why people are encouraged to have personal savings or personal pension or other assets
If you are paying a mortgage, I assume you won't have this expense at retirement age

S1lverB1rchW7 · 08/04/2019 19:45

If you are 40, your state retirement age will probably be 68 or 68+
You can also check this on www.gov.uk under the pension section

GeorgeTheFirst · 08/04/2019 19:49

Have a look at the charges. Can you move the pot to cheaper funds (with the same provider for ease, if you prefer) so you might see the benefit of more of the growth?

GummyGoddess · 08/04/2019 19:54

PP is correct, you have over half of your working life left to pay into your pension, you can correct the issue.

GregoryPeckingDuck · 08/04/2019 19:56

Presumably you will be able to sell your house to fund your retirement?

PlainSpeakingStraightTalking · 08/04/2019 20:07

And I don't save either, as I have a massive mortgage as live in the SE

But you will sell, downsize, release the equity and become a mad cat woman with a sea view! This seems to be the generic plan for my generation

IceRebel · 08/04/2019 20:08

AIBU to think it's pretty pointless for us mortals on a low income

Pensions are never pointless. Look at other areas of spending, large mortgage, commuting costs etc, is there a way to reduce these at all? You say you can afford to put more in, so i'm confused about why you also say you don't have savings, where's the money going?

Polarbearflavour · 08/04/2019 20:19

Millions of people are going to be retiring with tiny pension pots and still having to rent in their old age. When people earn minimum / low wages, how can they put more into pensions?

It’s a ticking time bomb that governments won’t discuss. The social welfare bill will run into billions.

purplelila2 · 08/04/2019 20:19

Not everyone can afford to save into a pension I certainly can't. I've reduced all my own outgoings and the 4% contribution is too much of a sacrifice to make.

I've got a mortgage 3 kids and my earnings haven't gone up in real terms in line with inflation
paying my bills is my priority.

MulberryPeony · 08/04/2019 20:24

How long have you had the pension and how much do you pay in each month? It’s a small pot but plenty of years to add to it.

Original poster
readyforbeddy · 08/04/2019 21:35

It's 7k total pot, so that's what's in the fund now.

My house is certainly not a mansion, it's a very small 3 bed. I don't know I could really downsize, I guess it depends on what my now preschoolers are doing in 25 years time. I suppose I could go back to a flat in my old age, but leaseholds have other charges to consider.

I don't save. I can't save. I can't put more into my pension @IceRebel . I'm super frugal.

I'm totally overstretched. I don't have spare money each month to overpay my mortgage (and I have 21 years left to go on it.) I refix it when I can, I try to try to get it a bit cheaper.

I mainly work as a contractor, so I don't get employer contributions job security. I'm sadly not a massively well paid consultant type. I do need to work in London. The further you move out the more money and time you spend on the commute.

I've had this pension since I was 20.  I got it when I started working full time before uni. But I didn't really pay in as a student and I'm really only paying in a token amount each month.

I have some money in a NEST pension too. But I think that's about 2k. That's it. That's all I have.

I know how much you need in your pot depends on what monthly income you want. I can't get my head around how to make that work.

OP posts:
rainbowunicorn · 08/04/2019 21:56

A pension is never a waste of time in my opinion. How much do you pay in just now? No matter how small the pot is it will still give you some additional income in retirement. Things could change for you in the next 28 years regarding work and you may be in a position to put more in. I would always prioritise a pension.

Original poster
readyforbeddy · 08/04/2019 22:23

@PlainSpeakingStraightTalking aren't sea views more expensive ? I see myself as poor crazy dog lady. Grin

OP posts:
MotherOfDragonite · 08/04/2019 22:34

Find out whether your employers match your pension contributions, and if so up to what level. To be honest, if you don't put in the maximum that they match, it's a bit like giving up some of your salary.

Yes, at age 40 it is still worthwhile. You have 25-30 years for the interest to mount up before you retire.

And finally, don't be disheartened. It may not be a huge amount but it will be better than not having it at all. Remember that you will also have your house and, even if you don't want to downsize, you will be able to free up some capital by moving to a cheaper area when you no longer need to work in London.

PeachyPrincess · 08/04/2019 23:07

At least it’s something. I found this pension calculator really useful to help me see what I could do to save more

www.pensionbee.com/pension-calculator

Chlo1674 · 08/04/2019 23:09

.

IceRebel · 09/04/2019 07:08

I don't save. I can't save. I can't put more into my pension

Sorry I was going off your OP which said Ok I could pay in more

sashh · 09/04/2019 07:20

There are two options really, one is to pay morein and the other is to think of this as a lump sum you will get when you retire.

I already get a pension from a previous employer (ill health retirement) but like you have a small pot, i my case it is in a SIPP. I used it to consolidate a couple of other pension schemes from different employers and I will take it as a lump sum rather than a pension of £5 a year of what ever.

You can go that with small pots, I think it is 10K and under.

ScreamScreamIceCream · 09/04/2019 07:25

No it's not as you can add to it as you aren't retiring for another 28 years at least.

As PP said have a look at some financial websites and if possible move jobs.

Jessgalinda · 09/04/2019 07:29

Can you not become employed?

Change jobs and go for something where an employer will contribute.

Original poster
readyforbeddy · 09/04/2019 23:11

Can you not become employed

Urm well that's the holy grail for many a contractor. I needed a job, due to being made redundant. The problem with my job is it's only needed for a short amount of time in a company. It's great but intense work, then I'm not needed for another 5-8 years, so the position goes. So it makes sense for companies to take me on as a contractor. This is not my preference at all. In fact I've interviewed for permanent positions, to then be offered a contract. It's like once you start contracting your stuck in it. It used to^^ be better money, but now I find is just the same with less benefits as being employed.

I've been made redundant 3 times now from employed jobs in my field. And yes I have tried to change jobs, but those transferable skills are a risk, plus I like my job.

OP posts:
Putthatlampshadeonyourhead · 10/04/2019 05:26

Ok, that's why I am asking.

It just seems that you arent really getting any benefit from being a contractor. Ie great pay. But lack of stability.

I think you maybe need to decide what's important to you right now. That may change in future

I was self employed, it worked well having young kids. The kids got older and I wanted employed stability, company benefits including a pension etc.

I ended up taking a step back in my career terms and changing job role, to get that.

It wasnt ideal, but my focused changed it terms of what I needed from my job. I have less flexibility but now the kids are older that's fine too.

I think you can only do the best you can do. If a pension is very important, maybe make a plan so that in 5 years you can starting adding moren

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