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!

There are a lot of people who will only retire on the state pension.

All of these private pension pots will be on top of state pension when that kicks in.

Anyone looking at their private pensions do look at your NI contributions and see if you have any missed years and whether it makes sense to buy them back. You can log into the government site and see your NI history and predicted state pension amount.

Please can I join?

I'm 35 & my pensions are in a dire state. I have £16k in a former work pension & £1159 in my current workplace pension.

I'm pretty sure my contributions to my current pot are incorrect - I think there has been a payroll slip up. I want to be paying in 5% (which is what my employer will match) but am paying a quarter of this. I've been round the houses trying to sort it out.

In the meantime, I'm sending an extra £100 a month in a separate transaction. My husband & I are currently overpaying our mortgage by £2k a month (outstanding balance of £247k) - but this will soon reduce as my 10% overpayments kick in - so I'll the pay the difference into my pension. Reading here I'm wondering if I shouldn't reduce the overpayment now & throw more at my pension.

It doesn’t matter what the average person does. I can only control my own finances and although I’m interested in what others are doing in a proactive way about their pensions, I’m not going to change what I am doing as other people aren’t doing it. I am not average, I am unique and quirky.

I looked up the playing with fire documentary and at first it came up with a comedy fire film, but when I did find it, it looks interesting

www.playingwithfire.co/the-documentary

I think we will probably watch it next weekend as DH pointed out it wasn’t exactly romantic viewing for Valentine’s Day. But thank you for letting us know about it. Hopefully it will be very inspirational. The more I read about it, the more I want to try it. I think that there are people who do elements in this country, but mainly to pay off debt or because they have to. Most people adjust their spending limit to their income with fancier cars, clothes, housing, food the more they earn.

In the old days of being in the office, I was always shocked at my colleagues and their twice daily Costa habits and m&s lunches. I will admit to the occasional m&s lunch as they are nice, but daily just seems so extravagant to me.

When I got my last promotion, I was repeatedly asked what new car I was getting. I will admit to spending too much on holidays, but cars and designer gear and takeaways have never half that much interest to me.

Hi @Dazedandconfused28 welcome aboard!

I’m not qualified to give advice at all, but there are probably some online calculators that might help. I would personally try and do a bit of both, interest rates are admittedly low but they are unlikely to stay low indefinitely.

There are definitely different schools of thought about paying off a mortgage. I did and mentally it’s amazing, this is my home and it’s all mine and it’s safe. However some people pay everything into pensions. However if the rates go up and up in five years time, on a large mortgage that could be unaffordable, especially if you have kids and have reduced income or childcare costs, so personally I would be looking to reduce your mortgage.

@2020BogOff I was always told to assume there wouldn't be a state pension by the time I retired and plan accordingly. Of course if there is no option to save due to family budget then that's different.

On the mortgage overpayments I would say balance is the key - don't put all your eggs in one basket is my investment/savings philosophy! We are lucky to have v good pension schemes (public sector) so chuck quite a lot at mortgage overpayments but tbh we also enjoy life too - longevity isnt guaranteed.

[quote KeyboardWorriers]@2020BogOff I was always told to assume there wouldn't be a state pension by the time I retired and plan accordingly. Of course if there is no option to save due to family budget then that's different.

On the mortgage overpayments I would say balance is the key - don't put all your eggs in one basket is my investment/savings philosophy! We are lucky to have v good pension schemes (public sector) so chuck quite a lot at mortgage overpayments but tbh we also enjoy life too - longevity isnt guaranteed.[/quote]
Yes I was also told that hence always contributing to a work pension. However I am now thinking that any removal of the state pension would take ages to go through and although I may have to eat my words my own feeling is that there will be something but it won't be much more than enough to pay for the essentials.

Would anyone be interested in a FIRE discussion thread? It's also something I've been following but with some doubts and it would be great to talk about it more if there are others who are interested.

@Mia85 I would 100% be interested!

Love the positivity and support on this thread... (I’m ignoring the other stuff!) Any difference we can make to our pensions will be helpful. I believe that the tax back element of pension saving makes them much more appealing than ISAs and mortgage overpayments - in the main - though I accept that they all have pros and cons.

Speaking of which, what happens to the pension if you die before you take it? Is there a universal rule or is this dictated by different pension providers?

@Mia85 - yes please

I think on the death before claiming it's a depends.

I have a small DB which pays half to DH if I die. My DC go to DH and I have nominated him as a beneficiary so they are held in trust so no inheritance tax. But I think it whether he pays tax on withdrawing it depends on what age I die.

I don't know all the ins and outs of each one but at the moment one thing I made sure was DH has me as a beneficiary and the same the other way.

I have an IFA and these are the details I typically leave to them e.g. I said are we covered for leaving it to each other if we die.

I and my employer contribute 35% between us. I started paying in 21 years ago into a much less generous scheme so planning to voluntary inc my contribution from April to ensure I can retire by 60.

Cant see much point to state pension removal, people would be reliant on benifits in order to live. State money would have to be handed out either way. If state pension was removed, people in the lower earning / part time jobs who are saving for pensions will soon start spending rather than saving. If I'm saving significant parts of my income rather than spending every penny I do expect to have something more than the basic when I finally retire.

@SantaMonicaPier - that’s great.

Good to see some people here have their stuff together.

Today, I’ve arranged a one-off contribution to DHs pension.

Otherwise I need to change a savings account into an ISA before April. Tomorrow’s job!

Death before taking pension depends on the age at which you die (75 I think without checking).

DH's went to his 2 children. They had the choice to take immediately as a lump sum (outside the estate & tax free), add to their pension pot, or something else I can't remember.

@Mia85 yes I am really interested in anything FIRE related.

I wish I had people in real life who were interested in this sort of thing. I am getting a buzz out of all the little things that help save me money as well as the big things. Using some apples that weren’t particularly nice for apple crumbles to use up a space in the oven, or taking a square metre of mini parquet flooring that hasn’t been laid or painted or varnished off it’s backing and using it as kindling.. it’s so nice to declutter and save a little.

I know someone posted a while ago about checking who the beneficiary is old pensions, which is definitely worth doing. I know mine go to DH and his to me. He merged his old ones a while ago and that goes to me.

@SantaMonicaPier 35% is amazing!

My DS asked me if I'd heard of FIRE the other day (I hadn't) and since then I've seen it mentioned quite a lot.

I've started a general FIRE thread here www.mumsnet.com/Talk/legal_money_matters/4165470-FIRE-starter?watched=1
Would be great to chat to people who are interested, it's tricky to talk about in real life. I've put a very basic explanation as a starting point.

Hope everyone who is interested will come over and chat @Dashel @Uniqs @bertieb7

@Dazedandconfused28 mine is like that - the minimum is you 5% and employer 3% BUT if you have a stingy employer (like mine) they only have to pay on the salary over £6,240 and not the whole salary.
There is a calculator on the .gov website.

Any advice for this middle aged divorcée?
I am reaching the end of my fixed rate mortgage, I have savings which I could use to pay off 20%. It would still be affordable until I pay it off in 8 years time when I hope to be nearing retirement.
My pension contributions have been reduced due to being a SAHP for 10 years and working part time whilst children were younger. I do have full NI contributions, or will have by 67.
I have contributed to 2 previous work place pensions which were valued at £150k for divorce purposes but I have no idea how much they actually might be worth. How do I find this out?
I also have been paying in to LGPS for 12 years but on low part time term time salary until the past 2 years when it has increased to nearly the average salary. This is projected to give me £8k pa at 67.
Is it worth paying AVCs or overpaying my mortgage which will be low interest rate?
How can I make decisions if I don't know what previous employers pension may yield? I realize the divorce calc isn't anything like real pot of money.
Help!!!

Think you need professional advice @awishes but compared with many divorcees you look to be in a relatively healthy position?

Personally - and this isn’t right for everyone - I think the tax and potential growth advantages of UK pensions outweigh overpaying a mortgage - especially if it’s relatively low interest. Depends on how much tax you are likely to pay in retirement...

Can you get w statement to ascertain how much old pensions are worth?

I'm not a FIRE type, really, but do love the idea of ensuring you have multiple income streams. I have my 'half term to do list' ready, which includes getting online access back for my pensions; looking at rationalising (I currently have three pots with the same provider, which seems a bit mad, esp as one is tiny!) and then I have a decent lump sum ready to transfer into the largest of the accounts. DH and I have saved through the pandemic - even though my income (freelancer) has fallen off a cliff - so I'm going to syphon some of those savings into pension too. Dh likes having a decent supply of ready cash, but he knows I like to 'squirrel' money away and is happy to indulge that!

Yes I’ve noticed we have also saved a bit from last month somehow so I’m moving it across to pension / savings. Yet tbd which...
Every little helps.

I’ve just asked DH to check if he contributes more via payroll if his work will increase their contribution. Potentially a bit late to that particular party...

I’ve finally got through to Vanguard and I’ve just arranged to move a bit of savings across to an ISA for this tax year.

So much flaming ADMIN involved in pensions! Better than the alternative I suppose.

@AndwhenyougetthereFoffsomemore
re rationalising - there was supposed to be some Govt arranged Pensions Dashboard coming soon, to make multiple pension pots easier to manage but I can’t seem to find out much about it online.

@uniqs thank you maybe I should take advice. I traded more equity in the house for not having a share of his final salary pension and slightly regretting it now!

@awishes - at least it’s done! Definitely get some proper advice. We are just internet randomers!

Thanks @Uniqs: I remember that being mentioned too a while ago, but haven't heard anything since. Tbh, mine are all with the same provider: and set up so long ago I can't remember why that seemed like a good idea at the time! I need to do some digging...