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!

@AndwhenyougetthereFoffsomemore
Last year I spent a bit of time looking at old and the current pension. Bit of an eye opener! One was doing brilliantly and one was almost stagnant. Guess which one I was diligently contributing £££ to every month!?

So I moved the crappy pension to something better. Annual reviews from now on!

To get the equivalent of a civil service pension on a fairly modest salary you need to have about a million in the pot for defined contribution. They are basically gold plated. I'm quite tempted to see if I can switch to the public sector to be honest.

I'm 40, I've just checked my pot and it's 113k. Predicted to be around 300k at 60. I work part time but I earn around 50k, paying £600 a month in (well my employer is.)

I'd still only get 8 or 9 k a year from it on current interest rates etc. I can see why people think it's not worth bothering to be honest. It's unattainable amount of saving for little return. Still every bit makes a difference I suppose.

Are you sure that’s all you’ll get girlofnow? That’s a huge monthly contribution from your employer. Could you add more on top?

My January salary pension payment arrived today in my pension account. I don’t know how it can take 3 weeks to get there. It doesn’t seem right, but hey.

I am now just over £4K. Obviously a very long way to go, but better than where I was last year! I have also opened a stocks and shares isa.

Payday is Friday and I should be in a good position to make my first large overpayment, so I’m super excited about that. But it’s not going to stop me bitting and bobbing to get extras as well. After all if I can get an extra £1000 in over the year in small amounts, then that’s one large payment.

I mentioned I was going to sell something to a friend on the phone and she told her friend who wants it, so she is going to leave £20 under a rock in her garden and I can walk to drop it off as my exercise and ring her doorbell and leave it on her door step.

Our online shopping didn’t turn up for the second time in a row, so i chased it up and they delivered later in the day and came with a free bottle of wine. I’m going to transfer £5 to allow for that as well.

I have £28 from survey money so with the above, I am nearly at my next £62.50 minimum payment level.

I totally agree about Civil Service pensions being great, I just wish I didn’t live so far from any of the jobs. There is a prison that wouldn’t be too far of a commute but I don’t know if I would have the right qualifications or be of the right temperament to be good a good fit. I don’t detach easily and I want everyone to like me and to help everyone I meet and I don’t think that would be good to be overfriendly with prisoners. Thankfully although these aren’t needed for my current role, they aren’t a downside either.

Anyone feel like walking me step by step through how to set up a personal or stakeholder or whatever pension for a new graduate (my son)?

He's currently living at home, trying to find work, but has had a few thousand arrive in his bank account from one-off freelance work and he wants to put some - maybe £500 - into a pension. We had a look but it doesn't seem as easy as 'sign up online'. He doesn't really have enough spare to use some of it in paying for financial advice!

I don't think anyone has mentioned ERRBO's. NHS Early retirement reduction buy out scheme lets you make extra payments to allow full pension to be taken 1, 2 or 3 years early without penalty. If you are planning on retiring before state pension age, and have spare cash it's worth considering.

@UpDownQuark

I would look at a lifetime isa
LISA www.moneysavingexpert.com/savings/lifetime-isas/

It would give him more flexibility considering his situation and young age and sort out a proper pension when he gets his first job. Failing that. If he isn’t going to be self employed he might be better off waiting to get a pension through his employer as then they will contribute as well if he does. He may also be able to use that £500 as an overpayment into that pension fund.

Thanks - I’ve checked with him and he does have an ISA but wanted to get off the starting blocks with a pension too, before it becomes something forgotten about.

Hard to guess how long he’ll be earning piecemeal rather than in full employment.

I am learning so much in this thread. Thank you everyone.

I work in the NHS but really dislike it and wish I worked elsewhere. I’m basically sticking with it for the pension - I don’t know if that’s terrible?!? I am tempted to massively throw money into the NHS top up (effectively a 5% annuity equivalent - I could buy a 5k addition to my pension for about 90k Of contributions) for five years and then look for a job I like.

Just checking in to say I did manage to get at least some of my half term pension jobs done: online access live on 2/3 pension pots now, and started having a look at the three different pots and thinking about rationalising/how to organise these. Still need to sort the third one, and get additional payment I have earmarked organised, so checking in here for some accountability. Thanks for this thread OP, it's really helpful :-)

@dashel there are rules about when your employer has to make the payments - it is something like the 22nd of the month after the pay day it refers to. Typically, this is when my employer pays as they do the bare minimum only when they have to.

We are due to complete on our house purchase next week so this is the last month I think I will be able to put away £1k for a little while. We can afford it but I think there is going to be a settling in period whilst we sort out all the new payments and there are a few things we need to buy - I hope to be on an even keel by June and will revisit.

I will then have to decide about pension v LISA - I usually fill up my LISA as I do like the fact that I can get at the money if needed (I know there is a penalty) but if I cannot put as much in my pension then which is the one to choose?

I checked all of my pots today and the total is a bit higher than I thought £80k, £75k and £23k - £178k.

I'm in the same boat 45 about 3k in pensions, we have lots of equity in the house, so a downsize is realistic.

But something I heard the other day, don't draw down at 55 if you are a higher tax payer, wait until you are lower or not working.

wombat
Sorry if I've missed this but as an NHS worker since 1990, the McCloud judgement is very interesting.
What happens to my pension contributions from March 2015 that have been paid into the career average scheme? Are they moved back to the first pot?
I also have special class status so can take my 1995 pension at 55 (and lump sum) with no penalty. The rest at state retirement age.

Great thread OP, thank you!

I need to have a look at where I am with my pensions, then come back, read through, and contribute properly.

@Dashel - I’ve thought the same (when I was an employee)... if you calculate all the investment growth your (for ex) £500 contribution for 20 days, every month, over a lifetime of contributions could have made... Someone gains and it’s not the employee!

Any corporate accountants out there care to guess how much interest this earns their company (instead of the Employees’ pension fund?)!

@AndwhenyougetthereFoffsomemore
Great you used half term to do the pension admin! I did the same: now I’m up to date for the first time in about twenty or so years - now sorting DHs pension and spread out some contributions leading up to April 6th.

@itwillbehormones - that’s very true. I think this is why a timely IFA session can be advantageous. You don’t know what you don’t know.

Enjoying and learning from this thread, thank you all!

Thanks to this thread I've just logged into my nest account for the first time. I only started it in 2017 through my employer, and only earn about 18k so its only tiny so far, but disappointed to see its lost money to date.

Is there anywhere you can compare different pensions? Ie the Vanguard retirement 40 fund to what i have now? Any reasons to not transfer it across?

I am really glad that so many people are being more aware of their pensions and looking into them.

DH was always said “I have a huge pension pot and my adviser says it’s fine” so we are definitely a bit naive and had no idea how little it was actually worth, although it sounds like a huge amount, yearly it isn’t.

Thank you @Fleurchamp for letting me know why it takes that long, although it doesn’t make me feel better about my employer! I am glad you had a nice surprise and with finding out the balance!

I couldn’t wait till tomorrow payday so I snuck £100 in there today 😄

@Dashel I’m also hoping that adding a bit now pays off ... seeing as the markets seem to have taken a bit of a dive...

[quote PensionsYes]@Dashel I’m also hoping that adding a bit now pays off ... seeing as the markets seem to have taken a bit of a dive...[/quote]
I contribute each month to an additional pension on top of my company one and I try to look at this in the same way in that when the stock markets dip I am buying low so its swings and roundabouts.

I have only just gotten around to putting my payday overpayment in, which will be included in marchs figures, so in summary

End of feb balance was £4063
Salaried deductions/employees cont from Feb, inc tax, £375
Extra OP from Feb salary inc tax gain £625

Current end of March projection £5163

But as usual, I’m hoping to get in some extra smaller overpayments as well. I’m nearly at the minimum paying in money from my side hustles, although Prolific is taking ages to approve things.

I know it’s still very tiny, but it’s progress as to where I was a year ago!

Added £700 to my LISA this month - trying to up my account balance before the end of the financial year.

Won't be able to save much over the next couple of months as we are moving home and will need ₤5k for the rental deposit.

Doing well @Dashel

@Dashel - I feel encouraged by your small overpayments to make some more of my own. It’s getting quite addictive...!

@Lollipity £700 is amazing.

Thanks to this thread and the FIrestarter one I've checked both my state and workplace pensions and am thinking about avcs. I am in the middle of a divorce though so don't want to start avcs until a judge has signed off on a financial consent order