Basic pension help

[moonstarsuns]

So I’m not very clued up on pensions, so with the FUND VALUE in the photo below, if I was retiring now for arguments sake, would that fund value figure be available every year or is that the total that i would have to live on out of this particular pension?

Is this a DC pension? Have you really only paid in £1k in 17 years? Or is that the amount you pay in per year?

The fund value is that top figure - that is the total
for 17 years have you only paid £1000 in?

The fund value is the total amount you have within your pension pot. At the moment (from age 55) you would be able to take 25% of that pot as tax free cash and the rest you could use to fund your retirement (or you could take the whole lot and pay tax on 75% of it).

The fund value is the total amount in your pot - you either draw down a percentage of it each year or use the pot to buy an annuity.

to be blunt, it’s a negligible amount and unusually small for 17 years. I can only think you’ve been very low earning. Are you going to need to rely on a private pension or do you have any other sources of income - a high earning spouse for example?

That’s my only pension alongside state pension of course and yes I’m aware I need to up my game massively

That amounts to around a fiver month that you've paid in over 17 years. Surely you didnt seriously think that you would be getting 5k a year for paying in a fiver a month.

How much do you pay in a month now and what’s the maximum you think you’d be able to pay in? How many years left before retirement do you have?

@rainbowunicornlike I says in my op I was totally unsure so no need to be rude

@Overthebowim 42, only just decided today to start paying in 20 a month. I don’t work as have no childcare and also a carer for one of my kids. Hubby works but SE so very up and down income so it’s a struggle for us and also we rent which is expensive and can’t see us ever being able to buy. I’ll get inheritance one day but I doubt it’ll be enough to buy or obtain a mortgage

If you were retiring today and made typical decisions but took no lump sum you’d be doing well to get a couple of hundred pounds of year out of that pension.

Have you checked you can pay in if you're no longer working there?

@Cricketashesmy current pension is a stakeholder one so not tied to any company

OP it’s really not worth your while putting £20 a month in if you’re not working. Theres no tax benefit, no employer contributions and it’s such a tiny amount it will make no difference to your living standard when you retire. You’d be better putting it in an ISA or something.

£20 a month isn’t going to make much impact, especially if you don’t have an employer paying in too. What about your DHs pension, is that doing ok?

£20 a month wont achieve anything you can draw down on. I would concentrate on saving.

You still get tax relief up to £2,880 even if you are not paying any tax!

But I agree, £20pm plus £5 tax relief is still meaningless if you need an income in retirement.

Yes, that's the total pot, OP.

I'm going to strongly disagree with everyone else though. If you manage to put another £20/month in until state retirement age (which the government will top up to £25), you could easily end up with a pot of £30-35k (in real terms, ie that value in today's money). If you then leave some of it invested, that could give you nearly £2k a year over a 20 year retirement. If you have the state pension as well, that could be an income of about £14,500 (rather than £12,500 on state pension alone). Although it might not seem a huge difference, that extra amount could be the difference between managing ok and having a few treats versus barely managing. It is well worth doing (although of course even better if you can put more in).

A few things to check-

• how many years' national insurance contributions do you have and how many more do you need for the full state pension?
• what is your pension invested in? If you have never checked this, it will be in your provider's default fund, which might not be the most suitable one for you. You have over 20 years until retirement age so you can take some risk.

Even if you have no earnings, you can put £2880 into a pension every year and it will be topped up as if you had paid tax on it, to £3600. If you could put that much in- and I appreciate it wouldn't be easy- you could end up with £150k by the time you retire. It really does add up so it's well worth putting what you can in, and don't feel disheartened.

Not true that there is no tax benefit. You can still get tax relief on £2880 per year even if you don't work. Better than any interest rate you will get.

You need to up your income and find work around your DH - evenings and weekends. You’ve got 20ish years to build a pot.

To answer some questions, how much would people suggest is a decent amount to put away a month?

Also ti answer someone else’s questions, I have full state pension contributions as I’ve always worked from 16 up until 34 so my state pension is all good

That would depend on what lifestyle you want in retirement and how much you’ll need to live (rent being the big one here). How much above the state pension amount do you think you’ll need?

Well I’m never going to own a house but at some stage I’m hoping to get a council or HA property (on the list now), so presumably some sort of small rent for that then just general living expenses for food clothes etc. I won’t need a lot, just enough to keep afloat

I have around £750 per month going into mine. That includes my employers contributions.

I have a similar amount going in a month. About 25% of my income.

If you're not working the max you can put in is £2880 a year which the government will top up to £3600. If I were you I'd be trying to get as close to this figure as possible.