How much will you receive from your Pension?

[WinteryWonderland]

I'm on track for full state pension after checking recently, so that's something. DH is also on track and has a private pension, but we've been advised to up the payments by £500 month 😬 like we have that surplus floating around!
I just wondered what other people have in place and how much that will provide yearly when you retire?

Their comparison of annuities to drawdowns also seems pie in the sky! It says they have assumed inflation at 1% and investment growth at 3%. What the....? On what basis?

@Mia85

I learnt a lot from these threads over the years, the basics for posters are the same, the figures are just different.

I also learned that if someone told me that they could get my largish pension lump sum (it wasn’t part of our planning, but annoyingly just over the lump sum limit.) out in one go, that they were lying and would have required me to pay a huge sum of money to indemnify them for any future claims.

So between that and annuities, I learned quite a bit before we found the right FA for us.

Ditto charges and what to expect annually, oh and ditto that when you do draw your 25% to draw £100 first other wise if that is your first draw down the pension company will stick you on emergency tax and it is a bugger to get back from HMRC until they are good and ready.

So in conclusion, in the days when we were still hammering the pensions I learnt more, than I lost, in feeling a bit overwhelmed by other peoples sums.

I had H&N cancer eight years ago, not as widely diagnosed then as it is now.

Consequently I am eagle eyed and eared for people with similar symptoms, someone was talking to me at the golf club and mentioned their symptoms, I told them to go to their doctors asap.

They weren’t as lucky as me in the end, but I was able to help them navigate the early days of appointments and what to ask for.

So in the immortal worlds of the BT advert it is good to talk.

And if it is not hateful talk I fail to see the problem.

I've just run the total value pension pots that they are suggesting would provide annuities at the levels they are suggesting through some calculators and even if people worked all the way through to 68 it appears that at present savings of the value they are quoting would yield roughly half of the annual income they are claiming, so that is very misleading. Obviously annuity rates can change but it is worrying that this could give people a totally false sense of security so that they believe they'll receive double the income that they may in fact receive. Clearly there's a lot of uncertainty involved in any long-term projections but these ones seem off the charts in terms of optimism. 😐

God. I absolutely hate reading threads like this. They totally freak me out. At the moment DH and I are mid 40s and both have a defined contribution pension which added together comes to about 100k. We wil be on track.at least for the state pension but whether it will still be around in 20 years who knows. I think I need to try and move to the public sector just for the pension and benefits. Currently work for a charity so get low salary AND low benefits. I pay 5% in and employer adds 3% on top but since I only earn 25k and live in London I can't afford to add more. Don't see how I'll afford to live when I do finally retire.

Did you mean to @ someone else? I haven't suggested people shouldn't make these threads. Just linked to two pieces of research on what people actually spend in retirement, which might be reassuring to people who are put off by the very high numbers that some posters have. If it seems utterly impossible then people will give up.

If you are talking about Which I haven't looked at it recently but my recollection is that it is slightly confusingly written because they assume that you have the full state pension too so the annuity etc is for the remainder.

If you look above the Which link I've also linked to this https://www.retirementlivingstandards.org.uk which seems more thorough and clear. They are just redoing their research (the last couple of years are simply applying inflation to the previous research) which will be interesting.

I've been temping for decades so never really got sorted for a pension, I'm perm since last year and have been putting aside £150 per month pluse£100 from company, plus £28 I have always paid myself for years and years.

@Mia85 ahhh yes apologies, I didn't see you'd linked to both already! That would explain some of the anomalies in the Which? analysis, if it's including state pension in the figures. Bit of a gamble though to assume that will be (inflation adjusted) the same as it is now, potentially decades away for some people planning!! And their 1% average inflation per annum over a working life in their assumptions is just 🤯, given by that estimation we've had 30 years of their assumed inflation in the last 3 years! Doesn't inspire confidence in their calculations. 🤣

That's interesting that Loughborough are recalculating their figures now, will certainly be worth a look given inflation has been so uneven over different types of goods/ services. I shall keep an eye out for that, thanks!

Yes I did mean to @ you, @Mia85

No point in telling OP that these threads are worrying, because private pensions are now sadly a part of life, because as we all know the state pension is not very generous.

I think you might have misunderstood my post. The OP sounds quite worried about her plans for the future and sounds as if she has little to no private pension and is concerned that she can't afford the amounts she has been advised to put in. Her question was not about her own situation but about the situation others are in and unsurpringly she's got a range of responses including some very high amounts. In the past OPs in that position have been quite worried by the huge amounts some others have. The OP hasn't been back and I hope she's not feeling like that. I was posting to some research on the range of amounts that people actually spend in retirement. We know that lots of people feel so overwhelmed by the scale of the numbers that they don't feel it's worth doing anything. Seeing what is manageable might be useful.

Absolutely agree. And what is worse is that current salaries are being suppressed in many industries in order to pay historic defined benefit pension obligations of retirees who did not make sufficient contributions to fund the benefits they receive. And then everyone gets taxed more to fund the public sector ones that are unfunded which - despite reforms - still have outstanding promises which are completely impossible to be fulfilled into the future. To even things up a bit legislation should be updated to gradually raise both employer and employee mandatory contributions to DC schemes to at least double what they are now, and mandate similarly for the self-employed, but that would likely depress current salarieseven further as well. On top of the demographic shifts and the starvation of infrastructure investment and flatlining productivity it's not a pretty picture at all. 😕 So sad that the country has been run into the ground in this way in every respect, and there is no way out without significant productivity growth but we have no policiticans who seem capable of understanding that.

From a personal perspective, my children are young and once I get past the most gruelling years of childcare expenses that are hard to contend with as a lone parent I intend to open SIPPS for them so that they can benefit from growth over the longest period possible, even if I can't add large lump sums, but to get a pot started for each before they're old enough to work and contribute to it themselves. I hope it'll also help with financial education, to show them this is what was added and this is how it has grown and encourage them having seen that to contribute to it themselves as much as possible throughout working life. In a different life where I'd not been a lone parent I would have wanted to save £10k per child to put into a pension for them before they started school because timing makes so much difference with outcome when it comes to pensions. I guess we all need to drill into our children about saving from as early as possible, not playing catch up in middle age, as it's so much harder. And I suppose that at least - given I am not well and my life expectancy is not high - my children should inherit a decent chunk of what is in my own pension pot. I just hope I can at least provide for them and be here for them physically until they are adults first.

I thought @Mia85 's advice was well-intentioned and supportive, trying to point people towards independent research and not bury their heads in the sand 🤷🏻‍♀️ (despite my criticisms of said research!).

I don't understand this. Surely "accumulating the correct number of years" means "paying the correct number of years"?

I assumed that you need to just check your NI account on the gov website and check how many more years you need to pay for. eg I think I need to pay 5 more years until I'm 55 and then I will have paid the correct number of years to give me my full state pension entitlement which I can draw at age 67. My understanding was that I could "retire" early from my job, then, at any time after age 55, if I had the means to support myself in other ways eg living off savings, or DH's salary, until I reach 67 when I can draw the full state pension?

Are you saying that's not the case? I can't work out your BIL's working situation at all.

Nothing

I do not work through ill health, not entitled to any benefits, and have not worked enough so dont know what I will get, if anything at all

I am 54

I don’t fully understand what happened, but apparently even though he’d paid the required number of years of National Insurance. To get the full state pension he had to continue paying National Insurance until state pension age, even though he’d stopped working and was drawing a company pension.
he ended up with a bill of a few thousand to make up his NI contributions. As I said I thought it was a scam

@CurlyhairedAssassin I assume it may be because of the old state pension system where people could opt to "contract out" of paying some of their NI and have additional contributions added to their private pension schemes instead, but this meant that the years that they worked under this arrangement would not count as a year of work accrued towards state pension entitlement. Therefore, for example, someone could have worked for say 40 years but if contracted out for 15 of those, they'd only have 25 years of state pension entitled accrued. It's obviously very important to check the terms of all of your pensions, and log in and check your current state pension accruals because HMRC do make mistakes also! Not tying up records properly to NI numbers for employment or years spent in full time education or unemployed but caring for small children, for which "credits" for that year should be added to state pension accrual under current rules even when no NI contribution has been made.

@Syrupycake given you've said he has a "company pension" also (I assume you mean a DB scheme) it sounds like what I described above.

@IBlinkThereforeIAm could be what you describe. However I don’t have the full details to comment properly. I just remember being surprised at how little information there is about state pension rules. See the WASPI women who have lost out on their pensions. They’ve fallen through the pension gap https://www.waspi.co.uk/

@Mia85

We shall have to agree to disagree, not that we actually did.😁

Yeah those Which figures are way off. They're using a 1% inflation rate for a start. 😂

full state plus lump sum (around 150k, maybe more if go up ladder further) plus around 15-20k per year (depending how much lump sum I take. I have a good pension, been working 22yrs, and another 20 to go to state retirement age

Great post and yes I have too just learnt something about drawing down £100 first!

It is always good to talk about these things, so many people don't..I started properly understanding pensions from the limited posts on mumsnet plus the money saving expert forum. I feel properly up to speed now and have not resorted to the SJP platform I very nearly signed up to when I didn't know enough.

State pension but we have other things in place as income for when we retire.

You, like me, Will probably be disheartened by all the posts with x amounts of thousands of private pensions, full state pension, investments, inheritances etc etc etc. if I were these people I’d be out enjoying life, not wasting time on mumsnet!
hope you can improve your financial state soon.

Contracting out does not disenfranchise a person from getting any state pension!!
I do wish people wouldn’t give financial advice on social media….see a financial advisor.