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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

What age did you start paying in to a pension?

171 replies

Legoeverywhere92 · 19/12/2019 15:59

I'm 27 with a 4 year old who starts school next September so currently unable to put anything away and always opted out of pension contributions at work. I know I get a few years of N.I credits from child benefit but I'd like to retire with something decent so I'm not left in the same position as my mother who never worked and gets £113/week state pension (that's nothing).

When did you start saving, and how much did you put away per month?

Any tips on savings or good websites on saving for a pension/annuities etc?

OP posts:

BonnesVacances · 19/12/2019 21:40

@backtoMA Yes the half your age % does include the employer contribution. It's meant to target a retirement income of 2/3rds of your pre retirement income, which is what the old final salary pensions used to provide in the good old days.

blueshoes · 19/12/2019 21:44

What do people think about paying lots into a private pension (self employed so no employee contributions) vs overpaying on mortgage?

If you are a higher rate tax payer, it is worth paying into a pension because of the tax savings (which at 40% is a phenomenal savings upfront and the long term effect of being invested in the stock market through a pension).

I pay less than 2% interest on my mortgage and the interest savings from overpaying on the mortgage are minimal compared to the tax efficiency of paying into a pension. I admit that overpaying the mortgage gives me peace of mind.

stuffedpeppers · 19/12/2019 21:46

My in laws have started pensions for my DCs at the age of 2 years - now aged 10 and 12 they have a tidy sum stashed for their retirement

BacktoMA · 19/12/2019 21:47

@BonnesVacances phew! Thank you that's useful to know.

Pollaidh · 19/12/2019 21:58

Yes blueshoes is right, I forgot to mention the tax efficiency aspect as well.

SciFiScream · 19/12/2019 22:01

@Namechangeymcnamechange11 remember when you go on mat leave the company should still pay 5% based on your contractual salary while you only need to pay a percentage based on your mat leave income!

People get caught out by that.

SciFiScream · 19/12/2019 22:05

@BonnesVacances ... I've been increasing every year so that the percentage I save is half my current age! I'm a bit behind at the moment

Am I reading you right that as long as I was saving 12.5% (because I started when I was 25) then that would always have been enough?

I pay 20% now! Plan to increase in April again.

Megan2018 · 19/12/2019 22:11

I joined a final salary scheme at 24, its now average salary for the remaining years but still generous. I will get approx 50% of my salary in retirement if I do 40 years service in the sector (can change employer and have got 17 years so far). I pay 8.5% of my salary in, not cheap but worth it. I am also fortunate to have a BTL house as a second pension.

Starting any pension, however small, will be worth it in the long run.

CalleighDoodle · 19/12/2019 22:14

BonnesVacances · 19/12/2019 22:20

@SciFiScream You don't need to increase it as you get older as the amount is determined by the age you start saving. This is because you'll have been saving for longer so need to pay less per year. So starting at age 20 means saving 10% for 45 years, 15% from age 30 for 35 years or 22.5% from age 45 for 20 years.

But it won't do any harm saving more, of course! And it's not an exact science, but it's just to give people an idea of just how much they need to have saved up, relative to the income they have now and want to have when they stop working.

ivykaty44 · 19/12/2019 22:23

36 but purchased an extra 3:5 years, now intend purchasing extra pension and looking at AVCs ontop. You get good deal of tax relief on pension so if I buy and extra £100 each month it’ll only cost me £80 as the tax reduces and I get the £20 left in my paypacket

5foot5 · 19/12/2019 22:28

At 22 in first proper job. Currently putting about £400 a month away. In the past I was in schemes where employer also put in a nice big wedge but not so much at the moment.

Current value of pension pot is thick end of half a million but I am 57 and would quite like to retire soon if possible. DH has his own pension too so we need to do the sums to see if we can afford it yet.

Staggered at VanGoghsDog putting away nearly as much in a month as I do in a year! Still I suppose if you have the sort of income that allows you to save that much then you must be used to a very big salary so I guess you need a large amount put by so that you don't experience such a huge drop in standard of living.

plominoagain · 19/12/2019 22:34

Pay 14.25% a month into mine , which is about £500 a month . Don't know how much I'm going to get until the pension challenge gets sorted out

ViaSacra · 19/12/2019 22:34

First full time job.

Longdistance · 19/12/2019 22:36

19 when I started my first full time job, then moved on at 21 to a large companies scheme, then had dc and had a 3 year break, then joined my next employers scheme and the one I’m currently in.

VanGoghsDog · 19/12/2019 22:50

I suppose if you have the sort of income that allows you to save that much then you must be used to a very big salary so I guess you need a large amount put by so that you don't experience such a huge drop in standard of living

Not at all actually. I put about half my pre tax salary into the pension, the plan this tax year to use the whole allowance and some of previous years allowances (I've never yet maxed out a year, things change too often as I do contract work and self employed) and I save c£800 pm post tax.

This means I live on a LOT less than I otherwise might. Which in turn means I have no expectations to meet with my pension income.

I am aiming to have £400k in the pension and £100k in savings by age 55 (4 years away). I'm just under half that currently.
If you work on a 4% return, that would give me a pre tax income of £20k, which is hardly massive!
Once I get to 67 that can be augmented by the £8k state pension - woohoo!
Obviously I can draw down capital too, whenever I feel the need, but the more I draw down the less my ongoing income would be.

I honestly don't live like someone with a "huge" salary. So I don't need to aim for that in retirement either. I plan in fact to get the pension to a decent state and then do a more fulfilling job which I know would pay about 25% of what I currently earn, but I won't have to worry about the pension so it will be OK. But I also won't need to draw it so it would hopefully grow a bit.

I paid off my mortgage by being sensible with money. And I'm single (well, have a bf, but we don't live together) with no kids.

Thehop · 19/12/2019 22:55

Sadly, I was 39. And pay in very very little, bit it’s better than nothing I guess.

VanGoghsDog · 19/12/2019 22:58

Pension schemes have higher risk profiles (and hence higher returns usually)

This isn't true, you can invest in more or less any type of fund you like, with the full range of risk profiles, within your pension - whether it is a SIPP, stakeholder or employer group scheme.

You can just invest in a standard FTSE tracker if you want.
Pensions are emphatically NOT higher risk (than what anyway?) and it's reckless to suggest it.

VanGoghsDog · 19/12/2019 23:00

NHS final salary scheme does say on annual reward statement equivalent to a pot of so you can have final salary with a nominal pot.

That's presumably the transfer value?

VanGoghsDog · 19/12/2019 23:01

Or, do you mean the tax free cash lump sum?

Redwinestillfine · 19/12/2019 23:07

DropZoneOne · 19/12/2019 23:09

Started at 24 but left that job after a year so they just gave me my contributions back. So properly from 25, with a gap from 33-36 when i was out of work. I'm 45 now, and don't have as much as I'd like, so may start topping up when our options window opens in February.

Our pension is with Aviva, they recommend 16% salary (yours and employers contributions) and you aim for a pot of 10x salary. I've had 15% salary contributions for about half the years paying in, so a fair bit to make up!

Atilathehunter · 19/12/2019 23:10

Since I was 24 when I was working in my first full time job. I think it’s worth maybe £250k ish now as it’s been well managed over the years. I’ve always sacrificed salary and made maximum contributions and worked for companies which enrolled me automatically in their occupational pension scheme and matched my contributions to the tune of about 10%. It’s still nowhere near that of my parents’ however who both retired on final salary pensions at the age of 58 at a rate of 80% plus a lump sum.

So yes, pay as much as you can into your pension while you can

Starrynights86 · 19/12/2019 23:11

18 but where I live, you can withdraw it to help with your first home deposit which I did at 26. I'm now 31 and pay in 4% of my income and employer pays in 4%, as soon as I have finished paying off my student loan at the end of next year, I will start paying in 10%.

LemonPrism · 19/12/2019 23:11

I started aged 22... as soon as I got a job which offered a pension. Duh.

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