If you retired early on defined contribution pension

[Horseandgoat]

How much was in the pot when you retired and what age was that?

I mean DC pensions, not final salary / defined benefit civil service type pensions that guarantee an income of X when you retire.

@JamSarnie

I agree a career average is so much better than my DC will ever be. I don't think most people with one realise how good they really are (jealous )

I agree that they're lots better. There is a short-term cost. I had often wondered why DH and I seemed to have less disposable income than friends on similar salaries and realised that between us we pay over £600 a month into our career average pensions while they pay either nothing (alarmingly common) or far less into their DC ones. Obviously there should be a trade off to this later but I do worry a bit that since we're about 35 years away from pension age the whole thing will have collapsed by then and I'll have essentially given that money - which we could do with as we're currently in the expensive childcare years - as a sort of charitable contribution to giving old academics a jolly nice retirement...

The amounts you have already accrued should be safe in the pension.

In 2015 most of the public sector pensions moved from final salary to career average, and from then on, the accrual rates changed, as well as the date that you could claim your undress ex pension changing to state retirement age (for anything earned after that point). It is possible that the government will introduce further changes as time passes, but what you have already accrued should be safe on the basis of the current terms.

Incidentally, the government has recently lost a case called McCloud in the Supreme Court, where public sector unions sued the government for age discrimination over the 2015 changes which imago ted younger workers worse than older workers who remained on the old final salary pension. It has already been decided that workers in the relevant public sector pensions who were already in then in 2012 (when the changes were passed in law ready for 2015) and are still in now, will be able to choose to have their pension for the period 2015-22 under the old final salary terms or new career average terms. Most workers will be better off having the extra 7 years of final salary as it all accrues based on the final year of earnings or best 3 of final 10 years average. Plus, importantly, many of those workers will then be able to get that extra 7 years of retirement funding at 60 rather than waiting to 67 or 68. It is worth tens of thousands to many of the public sector workers in their 40s and 50s. Each individual worker will need to choose if to have 2015-22 in career average or final salary, and the government is currently deciding if individuals should choose now or at retirement. From 2022 the career average terms (still very good) will apply to all.

It doesn't take long to get up on pensions. There is lots of info on defined benefit pension sites devoted to the individual pensions and most have online dashboards to track your own pension. For Defined Contribution pensions, there is lots online suggesting figures a single person or couple need for a basic, adequate and comfortable retirement and how much someone should be putting into their scheme. Just a couple of hours if googling would make anyone much more informed very quickly.

And also lots of public sectors have links to financial advisers too through the unions. They can be helpful for getting a fuller understanding of what you've accrued and are on track for.

Agree with Wombat on informing oneself

Moneysaving expert has lots of overviews
www.moneysavingexpert.com/pensions/

Here is the LGPS information
www.lgpsmember.org/about.php

Here is the Teachers information
www.teacherspensions.co.uk/

Here is the Civil Service information
www.civilservicepensionscheme.org.uk/members/

Here is the PPF
www.ppf.co.uk/

And here is the Government's pensionwise site
www.pensionwise.gov.uk/

The key thing is to spread bet

• pay down debt
• have cash savings
• have tax free savings
• make use of employer contributions if available
• make sure both parties in any relationship make use of allowances

I hear you @silverfonze.. it's going to hit huge swathes of our generation.. dread to think what next for our kids. Late 40s and 50s is also retrenchment prime time in many industries and even if still physically capable, it is harder to deal with the stress and pace of change in modern workplaces.

I dont know what the answer is aside from 1) get a public sector job/pension pronto 2) increase your DC contribution as much as possible and 3) stop dreaming about early retirement like me!

@Listenign Quietly
You have to remember that the retirement age was set at 65
when life expectancy was also 65.

When the State Pension was introduced in 1906, at age 70. Average life expectancy was 42.

@listeningquietly really interesting and you know so much, you should be the pensions/DWP secretary...!

I find the Singapore system very interesting and worth emulating. It is fully funded, with employer and employee contributions, topped up by govt and invested by state answerable wealth funds in anticipation of an ageing demographic:
www.pensionfundsonline.co.uk/content/country-profiles/singapore

Horse
I'm an Accountant.
I refer people to my pet IFA, and she refers to me
between us we provide the right advice to clients

Singapore is a fascinating case because their economic model has rather fallen apart now that

• old people are not moving back whence they came
• migrant workers are demanding rights

tanguero
Interesting. My information nugget came from the Economist - I've not checked it
a merry hour of data diving beckons

It's scary to think how much you would need!!

18k for a basic retirement seems a bit much! I'd assume housing is paid for by then leaving living costs

How much you need to retire on a DC scheme is something that worries me. There are lots of figures available on the internet, but they don't always agree.

I'm currently in the strange position of worrying that I don't have enough in my pension to retire, while also worrying about breaching the lifetime allowance. I'm not sure whether I should be putting as much money as possible into it, or saving elsewhere.

What grinds my gears is that my colleagues are on final salary schemes, and don't worry about lifetime allowance due to the way it's calculated for them - they can take a far higher retirement income than DC schemes before it becomes an issue.

@evilkitten I agree that the amounts you actually need in a DC pension pot are terrifying.... I see £300k referred to quite often as a ballpark figure. That sort of figure feels completely unachievable for me... I put in extra into my pension (I pay in 10% and employer pays 10%) which is good for private sector but I only earn £21k pa so it's just not enough. My pension pot is £30k and I'm mid 30s. What's scary is that I know that's a lot more than many others my age and it's still not enough.....it just seems to be a ticking time bomb.

I wouldnt compare to people on final salary schemes of any kind, it's just depressing. One part of society is going to have pension income of 40+k (plus inflation) till 95, with the chance of early retirement and markets having no effect, while the other has to work through their 60s and probably 70s alongside 20 somethings.

450k for 65 by drawdown
www.google.com/amp/s/www.thisismoney.co.uk/money/pensions/article-7154777/amp/Britons-need-pension-pot-447K-hit-65-pension-age-100.html

So let's say 600 is probably enough to retire from 55

I think it’s one reason why you often see people who’ve had good private sector careers move into the public sector for the last 10 years of their career. They can come in at a decent level and getting 10 years if the defined benefit pension can often give them £10-15k pension per year, which can often double or better what they already have from their whole career - if stock markets are performing well.

That said, those with long term public sector careers often have had lower pay. In the last 10 years, there has been a pay freeze for most of it and public sector workers have seen their pay in real terms fall significantly. Lots of private sector workers would never want to work in the public sector for all kinds of reasons and pensions wouldn’t be enough to make them switch.

For anyone looking into pensions, definitely check out your national insurance record and get a statement. You can do it online. Seeing how many years you’ve accrued and whether you will hit the magic 35 years to get a full state pension by your state pension age is a key element in all the retirement calculations. Currently it’s £9k and that really is a very decent chunk of most people’s retirement income. If you can get to that, although it won’t cover everything, it will cover a lot and many people, especially couples who both get full state pension, can then manage without huge private defined contribution pensions and just a few £k top up. The thing to bear in mind is the state pension can’t be accessed before state retirement age. Lots of people are keen to retire well beyond they are 67 or 68 so need other income to rely on until that point.

I guess though if your defined contribution pot is very small, you won’t be looking at early retirement anyway!

I'm coming up to 60 next June and all my life I've thought I'd stop work at 60. I have a pension which I could probably live on, but then what? Especially at the moment when it's impossible to go out/away/on holiday.

I'm not quite ready to stop work altogether. At the moment I work three days a week and volunteer at London Zoo one day. I'm fit and healthy and have no idea what I would do if I gave up work altogether.

A £400k pension pot sounds like much but will barely get you £20k.
One thing is clear, there is no room for housing costs (where I am living) - the unavoidable ones such as council tax and minimum utilities will reduce this by £4K today, and the rate at which council tax has been going up, it will be more than double in 20 years’ time.
The only solution I can see is more generations/sharers having to live together.

@ListeningQuietly

silver In my field (accountancy) nobody actually retires. They retire from a full time job get bored go back to a part time job / a consulting job the jammiest ones work a couple of months a year and then act like retirees the other months

a former boss who is now in his 80's still helps out in his old firm's tax department in January

many other former bosses do a few weeks on, a month off
or pick up seasonal clients
(these guys are not poor, they just get bored)

You have to remember that the retirement age was set at 65
when life expectancy was also 65
ie around half of all adults were not expected to live long enough to retire

If the retirement age had risen with life expectancy it would now be around 79 .....
But I in my mid 50's am infinitely fitter than my granny was at the same age

THe idea of a job for life vanished in the 70's and 80's
The idea of full on retirement at age 65 will be considered an anachronism by the time I get there

er its not 65 any more currently its 66 and will rise eventually

I was born in 1061 and my state pension age is 67. Thank god for company pensions.

I have a career average pension plus a pot that is overseas and which will have to stay overseas until I'm 55 minimum. I also pay some AVCs but I have to confess that I'm unconvinced that my career average pension will exist for much longer, let alone still be there when I'm 62 (currently 37).

I'm not averse at all to the idea of working past my retirement age but probably not in the role I'm in currently, although people do. I guess I will have to see what the state of the world is in 25 years and see if there's something I can move into that will be interesting enough for maybe a couple of days a week.

You need to assume that each £300-400k will buy C£10k in annuities at retirement age(though of course you don’t have to purchase annuities, it’s just a rule of thumb). Work out what your desired lifestyle will cost and you’ve got an idea of how much you need to be saving. You’ll need more if you want to retire earlier

On a 3.5% drawdown - this means £3.5K per £100K defined contributions pot.