To find this pension forecast depressing

[Hanhan5]

I thought I was doing really well with c.£180,000 in my pension at 35 and combined employer/own contributions of c.£1000 a month.

I had a forecast statement through in the post today and it suggests based on the likeliest scenario that I’ll have a pot worth c.£600,000 when I’m 65.

I thought it would have been higher and makes me wonder what sort of retirement I’ll have😪

That's a good pot. You'll be fine.

If not, you could work until 76 like the rest of us.

@Hanhan5 I thought I was doing really well with c.£180,000 in my pension at 35 and combined employer/own contributions of c.£1000 a month.

You are. That pension pot and those contributions are freakishly high.

I had a forecast statement through in the post today and it suggests based on the likeliest scenario that I’ll have a pot worth c.£600,000 when I’m 65.

Are you in a low growth pension pot?

Is that a forecast based on what you currently have in your pot? (i.e. if you stopped all contributions today).

If the answer to both of those questions is yes, that's why your forecast is only £600k.

If you are in a high growth fund, I would have thought you would be close to £2 million at 65.

It’s based on what you would have with what you’ve paid in so far
If you carry on paying in you will be fine!

That’s weirdly low given if you invest at the same rate until 65 you’ll have £420k without any growth. I would expect it to be more than that too. Maybe it’s invested in an ultra cautious fund?

It’s in equities, current annual returns seem high in terms of % and is based on contributions continuing at current level.

If you or your employer made no further contributions, at a conservative growth rate of 4%, the pot would be pushing £600k in 30 years. Your statement must be wrong, or assuming no further contributions.

If you’re unhappy with it, there are so many things you can do. Work to increase your salary, pay more in, have a separate private pension on top of that. You still have a bit of time left to sort it out.

Is your pot invested correctly? If you have £180k and contribute at the same rate until you’re 65, you’ll have £540k with no growth. For comparison, my 8 year old pension (as in I started it 8 years ago) is worth £110k and has growth of £35k. Even ignoring compound growth, that’s just over £4k growth a year, so if your pot had that same pound note growth it’d be £670k at 65. And the compounding effect would mean growth would actually be wayyyy more than that.

Was the number the project pot if you don’t contribute more.

That’s just not possible as an accurate prediction.

For what it’s worth, I have £110k, put in £1,500 a month and my forecast is about £1m. Even with the 25% lump sum that’s estimated to give me £85k per year income.

Something isn't right.

As the other poster said, the rate you are paying in at means you would have paid in £420k by age 65.

For a pension pot to be worth £600k, then that means your total growth would have been only 43%.... across 30 years...

You should be in a fund which is expected to grow at 5 - 7% per year on average.

If you pay in at your current rate, that pot would be worth more than £2 million.

This is assuming we're talking about a defined contribution pension by the way.

You're talking as if you're talking to someone who is 50 or 60 that has a small pension pot and only limited time to sort something out.

Did you miss the part when OP said they are 35 with a £180k pension pot, and is putting in £1000 every month?

Given current annuity rates and dependant on what type of pension you want (survivors benefits, index linked etc) that would total a pension of approximately £27k per year from 65. Or you could draw down £20k a year for 30 years. Plus state pension of currently £12,500 so approximately £40k a year in pension...given that your kids should be independent. Your mortgage paid and you don't have a commute to work every day...

And remember the pot is based on a set assumption of growth. Normally fir other investments its 5% ...not actual, so you could if allowed go for a more aggressive growth plan (bigger risks) for 10 to 15 years and hopefully you'll get bigger growth.

No, I didn’t miss that, I had assumed they were one of the hoards of posters recently who may be not be posting with the best intentions. So my answer was a bit tongue in cheek.

If this is not the case, then I apologise.

Are you a similar age though?

Gosh, I don’t know how you’ll survive.
I found out his week that my NHS pension is currently worth £2,000 a year. I’m 50. FML. I doubt I’ll return to nursing now due to circumstances. I don’t even own my own home and no chance of ever doing so. I’m royally fucked.

@Franxi Ah, I see. I am not the sharpest knife in the drawer.

You must have a low risk pension. Risk levels generally 1-10

4 years ago I had 147k in my pension. I've contributed 120k in it since then at risk level 7-8 and its much higher now. Ive had some serious drops (thank you Mr Trump, many times), but it has picked up again and grown.

You need to up your risk level. The invested funds, you can find out the risk levels by searching the funds.

Have they accidentally given you a paid up projection rather than one that assumes you’ll carry on with the contributions?

This also might be an error unless you’ve only paid in for a very brief amount of time

3.5% of that as income = £21k/year

Considering you'll likely be adding to it for another 15-20 years I'd say you'll be doing better than most

Projections are usually valued in ‘today’s money equivalent’, so effectively growth minus inflation. Nominally might have £2m+ in 30 years time, but it will pay for £600k worth of today’s lifestyle.

might be plenty or might be a major downgrade in lifestyle depending on lifestyle expectations and housing situation. What proportion of salary does this equate to? I would aim for 10-15% minimum, but if a higher earner take advantage of tax benefits as much as you are able. Op started saving early which makes it so much easier to achieve a decent pot.

@Labraradabrador What proportion of salary does this equate to? I would aim for 10-15% minimum

If we assume the lower end, and assume OP is putting in 5% and employer is putting in 5%, then putting in £1000 a month would be putting in 10% of a £120,000 salary.

So either OP is on a colossal salary, or is contributing much more than 10%.