Building up pension challenge

[Dashel]

Hi all,

One of the things that I have financially gotten around to looking at properly during Lock Down is my pension or lack there of.

I have a work place pension which is easy to log into and to make one off payments to, so I thought that now would be a great time to start trying to build up this pot as it’s not like I am spending normally, with hardly going out, no holidays or weekends away or meals out.

I wondered if anyone else out there would like to join me for support and to hopefully increase our pension pots to help have a more comfortable retirement?

A pension thread on here a few months ago, leads me to believe that I’m probably not the only one who has left it a bit late. I started this year with a work place pot of £3k so not going to keep me in a comfortable retirement unless it improves significantly.

Any money that I pay into this pot does get the 20% added to it (short of a lottery win I won’t be exceeding the £40k limit for the tax benefit) so I am hoping that I can finish the year on at least £10k but in an ideal world it would be more.

Thanks for reading and it would be great to have others for support and encouragement!

I started doing this a few years ago - I had massively neglected my pension for years whilst I overpaid my mortgage - I regret this now!
I started off small, making £25 payments here and there but once I had enough rainy day savings I started putting in more and now I put £1k a month in. We are moving home soon so I might have to drop this amount until things settle down but it has built up pretty quickly with the £250 added each month by HMRC.

I also have a LISA for retirement.

Another thing I would suggest is checking your state pension to make sure you are on track with that (you can do it online).

Hi @Fleurchamp

We have paid off our mortgage a few years ago, but have been using the extra money to do some renovation work on the house. I was exactly the same as you, we fixated on clearing that and then building up some savings and neglected pensions.

£1000 a month is amazing! I increased my salaried contribution to £250 plus the 3% employer contribution on the minimum payment plus the tax contribution so That’s £375 a month plus I can log in and make payments on my debit card.

I have checked the government website for my pension stamps and seem to be doing ok, but I want to retire early so I think I will be short a few years. We don’t have children and so are debating whether to downsize and run off abroad(I know that there could be issues with this plan due to Brexit but still want to investigate) to buy something smaller and cheaper.

I think having a pension I can claim at 55 would be helpful and hopefully the renovation work should all be paid for in the next 6 to 12 months which will free up a lot of money to put to this.

I have also been looking at ways to cut down on our bills, although food is the biggest area to cut down and to raise a bit of extra cash to increase contributions. I have a pile to sell on Facebook when possible and a, trying to do a few surveys where possible.

DH is very against scrimping too much when strictly speaking we don’t need to, I just want to. I have been telling him about the FIRE movement and he doesn’t sound keen. He is reasonably frugal though on a day to day basis. Years and years of being careful don’t go away overnight but he is insistent on getting new carpets for the house for when the work is done and that’s going to be expensive and strictly speaking we don’t need them just yet.

Just upped my pension contributions. But still cant see how I'll ever get to a point that will give me a decent income

@HandlebarLadyTash I feel the same, but I also felt the same about paying off my mortgage and I managed to pay that off, so I think it’s just taking it one step at a time and cutting costs where you can.

For example I got a £50 cheque for Christmas and straight into my pension it went. All the little payments do add up as I found out with the mortgage clearing. Then i was able to pay off any amount so if I saved 4.30 on my food shop it then was paid straight into the mortgage account. The mortgage adviser thought I was nuts at first but it was enough to get my DH on board and then that really helped

Yes please I’d like to join. None of my mates are interested in pensions as they all either earn £££ and put away lots each month - or they have nothing.

Like someone upthread I’ve tried to interest my DH in the FIRE movement but he doesn’t want to be frugal... plus he has loads in his pension so he’s unworried.

I have about £40k in my pension and I’m 44. I’m self employed and I only earn a few grand a year so I’m only contributing £3600 currently. My goal is to actually earn more then I will pay in everything I earn insides as possible.

I also have about £20k in an ISA.

My plan is to grow my business to earn £5k this year, and keep growing it until I can do no more. By that point my DC will be older and I’ll get a part time job which should increase my contributions significantly.

So for me the thread would encourage me to make more of my work time billable!L abs to ruthlessly cut costs wherever possible.

Currently I put in £240 each month (as per tax rules) and an extra £100 or so when I’ve earned a bit more.

I’ll find the up to date figures soon. I’m currently trying to move pension between AVIVA pensions but they are utterly useless.

@HandlebarLadyTash - I know what you mean! What’s your total versus your age?

Might you have equity in a property in the future?

Impressed so many of you have paid off your mortgages! We decided to max pension contributions whilst our interest rates were so low, but I cannot wait for the day when the house is actually ours!

I dream of putting £1k a month into my pension @Fleurchamp! If I knew DH could work from home most days forever I’d get a PT job, but your post makes me think I should maybe just do that anyway! And rethink the childcare later... hmmm!

Are none of you guys in the public sector and part of the defined benefits pensions?

I’d just mention how good these pensions are and that if you ever consider moving job, a job in the public sector can bring huge benefits int eras of pensions.

Lots of people go public sector for their last 10 years of career just to get 10 years of the decent defined benefit pension. For example, civil service pension accrues at 1/43 of salary per year. So if you earned £43k you would accrue £1k if pension per year and if you did 10 years that would be £10k pension per year from state retirement age...plus its index linked so will increase with inflation which is a really important benefit, along with death in service benefits etc.

How much would you have to pay into a defined contribution pension to fund £10k pension per year? Much much more than you’re likely to opt into your pension pit over 10 years.

Just a thought.

Wombat that’s incredible...!

Where is best to look for civil service jobs please?

Oh and that pension I’ve just mentioned will cost around 5% of salary psi in by employee.

What you pay in doesn’t determine what you get out...what you pay in is determined by your salary (higher salaries pay bigger % but most are in range of 4-10%) and in the current schemes which are Careeer Average you accrue a percentage of your salary each year.

You know exactly where you stand as it’s not linked to stock market plus its inflation proofed.

Can you see I’m a big fan?? It’s because I got interested in pensions as I got closer to 50 and DH was considering leaving public sector to go and work in or ate sector...and when we looked at the pension implications, he rapidly changed his mind.

There is also the pssobilbilty to retire early from 55 (that’s going to go up for all pensions soon) but you do receive less pension per year, as obviously you get it for longer.

@WombatChocolate just to add to that
A 10k a year pension needs a pot of about a quarter of a million pounds.

Any jobs with central government or bodies associated with it and in civil service pension. LGPS is the pension scheme for those working in councils and local government. Of course there’s then the NHS chimes or the teacher scheme or the ones for emergency workers.

Sometimes the pay is lower in these jobs, especially at the very top end, but often for mid range jobs it’s not that different.

Yes, so a £250,000 pension pot won’t be achieved by most workers in 10 years! And even if it is, there’s no certainty of what that pot will buy in terms of annuity or how long it will last as drawdown because it’s all dependent on how the investments it’s invested in perform. And draw down isn’t index linked to protect against inflation, as far as I’m aware,

@WombatChocolate

Yes, so a £250,000 pension pot won’t be achieved by most workers in 10 years! And even if it is, there’s no certainty of what that pot will buy in terms of annuity or how long it will last as drawdown because it’s all dependent on how the investments it’s invested in perform. And draw down isn’t index linked to protect against inflation, as far as I’m aware,

Totally

I think most people don’t know quite how much you need in your pot to get a half decent pension (it’s a lot!) and how generous a lot of defined benefit schemes are

Your example of someone earning 43k. If they spent their career there, after 40 years they’d get a pension of 40k. That’s equivalent of a million pound pot!

Though I knew about the size of pot to get a measly pension ... the civil service pension benefits ... well that is something else!

@PensionsYes I am in a similar position where most of my friends think pensions are dull and to be ignored. DH has £200k in his pension which I am very glad about and he can take that at 55. He got the vast majority of it from a job he held before we married and when he changed jobs about 10 years ago, it’s been the bare minimum going into it where his previous employer was very generous.

I am really pleased that it is a large amount, but I think it could still be more if we had paid in a respectable amount over the last 10 years and I have now put my food down and he has upped his payment to 250 plus employer 3% and tax.

£40k is better than my little pot!

@dashel
I'm always saving I guess the earnings are just not high enough, I despise my job & dream of retiring at 57 - this is 13 yrs away
It seems to me a pot of 300k is required for a decent top up to pension to the state pension but not enough for the gap between 57-67
I am a long way off £300k
This is a good month as the final mortgage payment was made in dec, hence the intrest & upping of pensions, I am really pleased but the squirreling away of money is never ending

It is worth remembering that the full state pension is about £9k if you get the 35 years of contributions. That’s a decent amount to add what everyone will have too...just for a bit of cheer.

Many sources say £18k for a solid retirement for an individual. The £9k does take you half way there.

Let's add in the high probability of ill heath halting the pension contributions
& the supporting of parents as they get older
& being totally knackered at 44
I will keep saving, but will be mightily pissed off if I die at 67

I’m 40 so still a way to go, but like others I don’t enjoy my job and I want to retire from the working world as soon as possible.

I know £200k isn’t a huge amount in terms of pension, it is going to be worked on.

I used to work for local government well away from London and 43k would be senior management and not many of those jobs are available at all let alone externally. There are a lot of perks like flexi and holiday amounts, sick pay and pensions but there are a lot of frustration and unhappiness which can make them depressing places to work and I moved away so I left, but I couldn’t have stayed until I retired.

I do need to find out the details of how much I get from that scheme and how much I have in there. It won’t be a huge amount as I very stupidly didn’t pay in the whole time I was there. My obsession was paying off the mortgage and in hindsight this was completely wrong, but I was younger and retirement seemed so far away.

@HandlebarLadyTash congratulations on paying your mortgage off! It was such a great relief for me. I hope it gives you peace of mind it gave me.

Sorry to break it to you Dashel, but you won’t be able to access your pension at 55. Although the legislation hasn’t yet been enacted, the government signalled in a white paper in 2015 that the access age would be state pension less 10 years. In a question in parliament last year, they verbally confirm that was still the intention. So that’s 58 for you I think.

That said - I’m all for pension saving! It all adds up, and of course being used to living on less as you save makes the amount you need to retire on less - and very handy effect!!

@HandlebarLadyTash - I know what you mean re dying at 67! And being knackered at 44 as well. Ditto...

Wondering how I can shoe horn my work into the cicvil service...

Have encouraged husband to increase contributions to 8% with some lump sums from bits and pieces.

I like idea that we can squirrel away what we can. Just need to earn more cash to save more... It’s god to keep motivated...

We went down the route of not paying off our mortgage but paying into our pensions . We still have a 225k mortgage and an early/ almost mid 50’s. I have 300k pension pot and 29/35 of state pension snd DH has 1.1 million pension pot and 34/35 state pension contributions. He is retiring next year at 55. I think we worked it out well take 25% out as a tax free lump sum and have an income of about 40k a year.

@HadEnoughOfGoingForWalks - I think you planned well