This is a terrible pension position isn’t it?!

[haengry]

I’m 38. I just got a letter from my private pension with the annual update and it says my pension value is currently 28k. For context I have been paying in since I was 25 and my employer makes a contribution too. We each pay it 4% a year so 8% in total. My starting salary was 30k and I’ve been on 60k the last two years and then in the fifties a few years prior to that. Surely it should be more? Does that literally mean I have 28k to my name if I was to retire tomorrow?!

Mine is only 25k and I’m on similar salary to you, OP. I refuse to make larger contributions right now with a young family to bring up. My husband does have a large NHS pension though, so I have that to even it out.

You need to pay in more than 4%. Even an extra 2% would make a difference as you’re on a good salary.

That is quite low. My sister has a similar contribution over a similar number of years and has double that. It's still not great, as her pension portal says by the time she retires she will get £5k pa.

I think this is risky, I would always want to have my own healthy pension too.

28K is better than mine, I'm 44 and have a grand total of £4.77 in a Black Rock scheme, thats it!!, thats retirement planning for you!!

This.

Also, can you afford to pay more? You can add voluntary contributions out of your net pay in to your workplace pension - if you have an Aviva account, it should allow you to set this up. The 8% total is a minimum payment - you can always pay more.

Alternatively, talk to your employer about whether you can do a "salary sacrifice" and pay in to your pension scheme gross (i.e. rather than pay £100 out of your net salary, you pay it out of your gross, saving you income tax and NI on it) -
Info

As others have said, you can transfer old pensions in to your new ones - you'd need to speak with the previous pension provider about transferring it to the new one.

The Chancellor announced in the Autumn Statement that it would be possible in the future to request that you keep the same pension when you change jobs, to avoid people having lots of pots all over the place.

Finally, on your Aviva login, you may find you can adjust how you want your pension saved. You may be able to choose your risk levels, so a higher risk might bring a higher return.

I am 44 and have less than you in my pot. It's something I'm working towards resolving, but I do have some other investments elsewhere.

Have a look at this website too - https://www.pensionbee.com/pension-calculator

Personal choice though, isn’t it. If we get divorced then I get half his pension anyway.

The half your age thing is the % you pay in when you start saving. OP started at 25yo so should aim for 12.5% salary every year to retirement. This is not supposed to then increase by 0.5% every year you age. If you start saving at 40yo you need 20% salary every year until retirement and so on.

It's rubbish. I have like £12k ...and I am 40! Seems like pensions do not make money anymore. They always stay the same or go down after fees. It pisses me off that they make it a legal requirement to contribute. I am good at saving and would much rather invest it myself then give it to these crooks, the only ones benefiting are the people that get to play with our money and loose it while they get big bonuses. At this point even putting the money into a high interest rate account would give me better returns

Definitely. Having other investments of your own is a very wise move.

It's really tricky to prioritise pensions when you have a young family OP. A few years back I was worried about how low mines was, so I started increasing my contributions by 1% every time I got a payrise - I never missed the money because it had never been in my pocket. (Doesn't work if you're on a sector with pay freezes.

As others have said, check when your contributions started with Aviva, and assuming you were with the same employer who moved you from Scottish Widows to Aviva, check to see if they transferred your pot over. If not, get in touch with Scottish Widows to trace it.

Pensions can seem really daunting if you don't know much about them, it can be really off-putting and I'm sure it encourages people to put their head in the sand and decide to think about it 'later'. But it's worth putting in the effort to do your research now.

You are probably in some kind of default option, so once you know exactly how much you have and where, start reading up on the Aviva website about different options they have and check out Martin Lewis website for info.

Good luck.

But you get significant tax benefits with pensions that you don't get with regular savings

To be fair, you've still got 30 years worth of contributions ahead of you, so even if your pension investments grow only in line with inflation, you'll have a pot worth close to 200k in today's money. Not amazing, but not too shabby either.

@ForeverDelayedEpiphany I'll make you feel better... i only have £2k in my old one that i had with work. I never paid into any when I was working during my 20s or 30s

Errr, of course you don't have a pension if you never paid into one. Very different from op who has been paying into a pension. 🙄

Not necessarily, 50% is just the starting point so you could get less (or more). Plus women are notorious about being fixated on keeping the house (especially if dcs are young) so then accept less pension to retain it.

You've misunderstood.

Pensions are just a wrapper. A very advantageous tax wrapper.

Within the wrapper, you can do what you want. And achieve tax relief.

You say you are good at investing. Well, do it. You can invest and manage your own pension. It's no different to any other investment. Except it receives tax relief, is not liable to CGT or IHT.

You don't need to let any "crooks" manage your money; you can do it yourself.

Unfortunately it's not low. The average employer contribution in the private sector is only currently 3%. Thats why its important to look at employer pension contributions when we move jobs as well as pay.

You can invest it yourself via a SIPP and then add in the tax relief you'd get

@Moreorlessmentallystable and yes, as cash returns are good at the moment, you can put it in cash funds if that's your preference.

Oh and investors got about 14% growth last year, mostly in the last 3 months, so your next annual statement might look a lot better. 😊

If you were auto-enrolled, your contributions might not be based on your full salary anyway. Your employer is allowed to disregard the first £6k and then anything above £50ishk. So if you’re earning say 60k, there’s quite a big chunk that doesn’t have any contributions deducted from it. Plus your employer’s contribution isn’t based on the full amount either.

@Augustus40 employers are only obliged to pay in 3% and that only up to £50k of salary. Mine does the bare minimum so on my total salary of £110k they only pay about 1.8%. Some employees are generous but some aren't and OP's are better than mine but clearly not great.

OP, on top of advice from others to ensure you haven't got a different pension elsewhere with another provider, I'd double check what your employer contributions are.

You also need to pay in a percentage equivalent to half your age when you started your pension. So you should have been paying 12.5% total from aged 25. I know that's easier said than done, I certainly couldn't afford to do that. So I'm having to make up for lost time now by increasing my contributions.

Check out the Hargreaves Landsdown pension prediction tool to see what you might need to up your contributions to. Because pensions are such a tax efficient way to save you may not see as much of a difference as you think, especially now you're on a higher tax rate. Eg I upped my contribution by 4% and it only made a difference of about £100 a month which I appreciate isn't nothing but versus the benefit you get from that eventually, it's not bad.

It actually really isn't as simple as that.

As I say, personal choice. Some people are more risk adverse than others. And I do have a pension that I pay into with a fairly high salary, it’s not as if I’m foregoing one. I also don’t need a full 50% of his pension to ensure I have a decent one.

I learned on here about Vanguard. Choose a low fee global tracker fund. My SIPP has gone up by 50 per cent in the last 2 years.