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!

Just logging in to mark my place to come back and add to this thread as I take action: I have a long running private pension as I've been self employed for years, but planning to top it up substantially as I finally move back into 'proper' paid work for the first time in years: complete with pension, hurray!!

@oo0Tinkerbell0oo

I've been reading up on pensions all week and it's scrambled my brain. I started work in NHS just over a year ago and will only accrue 15 years pension. I have no other pension and i dont own my home. I just want to know if it's worthwhile remaining in the scheme, but i cant get my head around it .

Why wouldn’t you stay in the NHS pension scheme? It’s a great pension scheme, you’d be a fool to opt out.

If you’ll only be in for 15 years though, I’d suggest paying in extra or starting a private pension as well.

Oh my goodness you must stay in the NHS scheme. Especially if you have no other pension savings. See pp about generous defined benefit schemes.

Fine to have a private pension as well as your workplace defined benefit scheme. But don’t opt out if the defined benefit work scheme, which as explained earlier is far superior in what it will pay out in so many ways.

Read back through this thread to be reminded of the benefits.

15 years in a defined benefit scheme might not accrue you riches but a decent chunk of money which could take most people far more years to feed into their defined contribution pension pot. And don’t forget the state pension that you’ll be contributing to all that time through your NI contributions will be building up too.

Dont come out. Dont go for a private pension which is defined contribution as an alternative.

Thank you for the replies. I have taken on board the advice and also advice from my manager and decided i will not opt out.

With regards to any work schemes, most of them send out information when you start with them or join the scheme, some of us file this away and forget/loose it.

It’s worth asking at work if there is an online account or information on the scheme at any workplace. There might not be an online portal, but each scheme should have some information and if you are curious about overpayments then ask if this is possible.

The worst they can say is no and I think it’s important to have as much information as possible as you can then decide to save elsewhere.

Tinker bell. Good stuff.
The website for the pension should have a ‘simple’ summary of how it all works. And often your union will have a rep who visits the workplace (in normal times) and does pension sessions. They might be useful for you.
Staying in though, and knowing it is just ticking away and building up is a good option and will give you a good outcome from 15 years of work when you retire. You’ll be glad you did stay in at that point.

Hi there, I’d like to join! I’m fortunate to have a DB pension (transport worker) that I’ve been a member of since I was 21 (now 38). However DH is older than me so a few years ago we decided I’d aim to retire early, mid Fifties if possible.

I now pay 5% into my DB and a further 10% into AVCs via salary sacrifice (these are the max amounts I can pay in via my workplace). I’ve also opened a Nutmeg SIPP for throwing in spare bits and bobs of money. I’m on a push to put as much into the Nutmeg as I can before the end of the financial year.

For a number of reasons DH pension pot is significantly higher than mine, more than I could hope even with scrimping and saving.
We share everything.
Happily married for 20 years + no reason to think this will change.....
If it did, where would I stand? Anyone know.
Something that I think about in the small hours!

@Broadbeanssleeping I know from my work colleagues who have got divorced that the pension will go in with all the marital assets and then split as the judge sees fit.

I know some guys who moan that they’ve been hard done by as the ex-wife got the house but actually it is quite fair as they have kept the whole of their large pension pot.

Another colleague decided amicably to split everything down the middle, so house was put on the market and equity halved, and upon his retirement half his DB pension will go to the ex-wife.

I'd like to take part in this challenge. I worry about how we are going to afford to retire quite a bit.

I have a defined benefit pension worth £8k per year from a former employer. On track to get my 35 years of national insurance contributions as is my husband. However my husband only has about £3k in a defined contribution pension. He lost his job this year and has about £10k in savings that he is going to put in a LISA this tax year and next. He is now doing an OU degree so won't be working again for a while as his industry has been decimated by covid, although we do let out a house so he has income from that.

I have a LISA with £2500 in that I am adding £350 a month to. We are also saving £200 per month for my children's university funds.

Our other long term retirement plan is to downsize our house - currently a fairly pricey SE commuter belt detached house, and hopefully release about 200k equity - but we have still have a mortgage on that so that won't be a possibility for a looooonng time yet.

So plans for 2021 are:

1. Open husband's LISA and max out over 2 years (£8k)
2. Open SIPP for husband and start adding (£unknown)
3. Carry on adding money to my LISA (₤4k)
4. Save £2400 towards uni costs

Boiler on the house we let out could go any minute so we need to keep ₤5k aside for that.

Good to have some more joiners and hear of others’ situations... my plan is:

1. maximise contributions to pension
2. earn more so I can increase £ to pension
3. consider putting other savings into S&SISA
4. sort old ISAs. I have a few questions for you a bit later...

www.civilservicejobs.service.gov.uk/csr/index.cgi
For anyone interested in jobs in the civil service

Always tempting to overpay on the mortgage but this is a good reminder to think about my pension as well!

I will join too.
I’ve been investigating my pension provision in the last 4 months, having suddenly got interested in it. My plan is to reduce work to pretty part time at 52 and to stop working at 58, but not to take any pensions until 60.

I have a defined benefit final salary pension which will accrue until 2022 under the McCloud judgement and allow me to take about £14k of pension at 60. I should accrue about £4K further under the Career Average part of my defined benefit scheme from 2022 until I stop working and so will get that at 68 (pension age will be be there by then) along with £9k of state pension. So at 68 I will have about £27k pension which is plenty. My DH will have similar amounts.

So I’m now thinking about funding the gap from when I go very part time at 52 and stop work at 58, until I get pension payouts. Some of this is fine fine for me because DH loves his work and will keep working full time until 60 and we can live off one income. However, I am paying into a stocks and shares ISA and also have a small SIPP which I can draw on from 55 which will give me a bit of a boost of income. So my intention over this coming year is to boost further my payments into these and into normal savings too. Because I’m already funding my defined benefit pension with the amount that is required by the scheme and determined by my salary (ie it is not flexible what I pay in to the standard scheme) I’m already paying in several hundred per month, but I can afford some extra into the Sipp and ISA.

My final salary pension will also give me an automatic tax free lump sum at 60, of around £40k. We will use this to help top up our income between 60 and 68 when the last bits of pension kick in...from 60 DH will work part time, so with his part time salary, my final salary £14k and a bit of top up from the lump sum or ISAs or SIPPs we expect to be okay.

There is a possibility that if the saving goes well, I might stop a year or two earlier. That would be nice, although I have to balance that against then not reaching 35 years of NI contributions and needing to pay that myself...currently around £770 for a year I think...might be wrong about that.

Mortgage is already paid off...makes a big difference to being able to save, plus how much I will need in retirement.

I feel fortunate and that I’m in a decent position, but there is still scope to do more and ensure more money or ability to stop sooner.

It’s lovely to have so many people posting and also joining in. I wasn’t sure I would get any replies on something that so many people consider dull.... obviously not everyone though 😄

Seeing what people are doing and have done is really interesting and gives me and hopefully others, a lot to consider.

We had a very frugal weekend, l cut DH hair as he bought some clippers in March and I have become his barber of choice now, more as being on site, there is no waiting or having to make a specific trip. But the clippers and scissors have more than paid for themselves now as I get him to do my hair as well.

On one hand I’m so desperate to go out and have fun but as I can’t, I’m really trying to focus on the money saving aspect and think of it as that. At least focusing some energy on this is being productive, but I am dreaming of booking a lovely holiday somewhere. That seems to be very unlikely, but more money for the pensions I guess if we can’t go!

Thank you @firsttimekat for the civil service jobs link. I've suggested my husband do an apprenticeship with them once he has finished or is at least part way through his degree.

Forgot to add ages - I am 41, and my husband is 39.

Tried to top up my LISA tonight but the transaction didn't go through (Im I'm currently in Asia), so have upped my direct debit to 700 just for this month.

It's really interesting to read other people's plans so thank you for posting them.

This thread has come at the right time for me. I've started to worry about my pension provision and really need to pull my head out of the sand and take some action.

I think if this thread shows anything it shows that pensions do drop to the bottom of the to-do list!

We’re going to use ISAs to help me save for retirement as I don’t earn enough to contribute much to pensions these days.

So - ISAs - I have one that I opened a few years ago and it’s at the limit...

Can I open another one for THIS tax year as well? In theory I could fill up the ISA limit every tax year, if I had that much cash?

Why ISAs rather than pension though? Wouldn’t you be better with the 25% uplift on what you can put in? Even if you’re limited by your earnings, you might as well have that boost on what you can save.

Thanks Guppy. I pay 100 pc of my meagre earnings into my pension already.

Fair enough! I thought you meant instead, rather than as well.

The bit I want to save is originally from husbands salary ... we are trying to make sure I have some savings in my name after neglecting my pension through several lean years (though we paid into his at times).

[quote BillMasen]@WombatChocolate just to add to that
A 10k a year pension needs a pot of about a quarter of a million pounds.[/quote]
This is a really interesting thread. I've recently turned 40 and been fortunate to have paid into pensions for almost my whole working life. But, I have no idea where I actually stand with any of them.
I need to pick that up. I know that my husband has no pensions at 40 but we overpay our mortgage so the conversation around that is something that I'd like us to look at.
Can I ask a question though? In the example above you're drawing your contribution for 25 years? What's the benefit of having that in a pension opposed to your own savings? Is it the tax breaks?

@PensionsYes the ISA limit is annual. So if you've paid £20k into an ISA in this tax year (6.4.2020 to 5.4.2021) you can't pay any more yet. But once we get to the next tax year you can.

The limit might increase and you can pay to a cash ISA or a stocks and shares ISA or a combination of both.

And @PensionsYes, you don't need to stay with the same provider. You can move to a different one but try not to withdraw the money as that'll go towards your next year.

Eg you have £20 in a cash ISA with Nationwide. You open another one with Lloyd's from 6 April. Leave the £20k with Nationwide because if you withdraw and pay to Lloyds, it'll take up all next year's allowance. You can take an ISA transfer instead if that was the right thing for you to do.