Concerned that my pension pot is on the lower end of what it should be...

[hyperbole001]

I'm 36 and have to be honest, I haven't given a great deal of thought to my pension. I probably started paying into one from 2009 onwards, but have had various jobs over the course of my employment history, and until recently hadn't put any effort into trying to track them down. Naively, I had assumed that the govt would be able to do this by simply using my NI number but doesn't seem to be a straightforward as that.

Anyway, from those I've been able to track down and have contacted, I've estimated that my pot is currently sat at around £26k. Does this see on the low side for my age, and should I be consciously trying to increase my contributions?

Well if I thought I was a bit stupid at the beginning of this thread, now I am absolutely lost.

@3luckystars

Well if I thought I was a bit stupid at the beginning of this thread, now I am absolutely lost.

There are two sorts of pensions. Define benefit (also known as final salary or career average salary). Your pension is based on - your final salary! And number of years of service. You are guaranteed that amount regardless of how long you live. Annual statements showing your projected pension assume that you stay in the same role till retirement date. These pensions are generally only found in public sector.

The other sort is defined contribution. Most private companies have one of these types. You pay into the scheme every month. When you retire you get a lump sum (this is based on what you, your employer and the tax have contributed, invested by the pension co) which you should use to buy an annuity, which is just a product which gives you an amount each month. The bigger the lump sum, the more annuity income you can buy. Annual statements will show you projections based on probably generous investments rates - with no absolute guarantee at the end.

I have a work pension, they send me a statement every year. It says ‘you have a gratuity of 50,000 and will get 10,000 a year’

Those are not the real numbers but they never change either, do I multiply the 10,000 by x number of years after I retire? It seems mad to me because how does anyone know how long they will live. Is this ‘pot’ just like the magic porridge pot, does it even exist?

Did you mean to use the word ‘gratuity’?

Anyway, for the purposes of valuing a defined benefit pension it is usual to multiply your expected annual pension by 20. Because that is the average expected number of years you will live if you retire at state pension age.

So if you have currently accrued £10k a year post retirement your notional pot is worth £200k. If in ten years’ time you have accrued £20k a year post retirement it will be worth £400k.

Pension ‘pot’ values are important because when they exceed £1.1m, you lose some tax concessions.

No worries for me then, it will never be near that amount!

Thanks so much for explaining that to me. Really thank you.

@TolkiensFallow

I’m in the 2014 one. I have a tiny one from pre 2008 but literally it’s worth £200 per year. I’m also a bit annoyed as I started paying into another local authority one in 2012 but changed local authorities in 2018 and merged the pensions to the new one which makes me the post 2014 scheme…

I guess I just really don’t want to work until I’m 68 to receive a small pension! Would love to retire sooner but the stats don’t look good if I do!

Do LGPS get the state pension aswell?

20k a year is not a small pension! You’ll have state pension as well so a total of 29k. That’s pretty good & more than a lot of people.

If you have no mortgage or childcare costs etc, why do you need £30k + a year to retire? It's a serious question.

@RainbowMum11 holidays, nice food, weekends away, helping children/grandchildren, cars, bills, insurances, pets, socialising, clothes, homewares, eating out… is it really that big a stretch of the imagination?

@TolkiensFallow
**
my pension would be £20k annually and no lump sum without pension sacrifice. Which doesn’t seem much to live off…

To put this into context for those with defined contribution pensions, you would need a pension pot of around £500k pot to yield a guaranteed £20k per annum

With the state pension on top, you would have some £30k annually, guaranteed

No so bad, really.

P.s. having read the full thread now I see that others ah e already said this, here is my 2p worth anyway.

@FinallyHere - And take into account market volatility...

Imagine you were due to retire with a defined contribution pension during the Covid market crash.

Whereas your 'not much to live off' pension would still have paid your £20k p.a

I think this thread sadly highlights the two tier system of pensions, and those who have decenent DB pensions, think they are rubbish.

Sadly, in a generation there will be some significant pvoerty in the have nots.

I'm not planning on spending time at home in retirement
Plan to do more of what I love, so international travel & sports hobbies & adventures (subject to covid restrictions ending)
Perhaps add some more expensive trips like antartic into the mix of budget travel

Maybe treat some family & friends too

Can possibly rent out my property if I am away

Live life to the MAX !

Easy to spend 30K

It's a pity that 30K doesn't fund a trip into space !

On a more serious note, the cost of social care can easily be 30k+ a month

Yikes, I thought my DM’s social care bill was high at £6500 per month.

I have contacted the people at SAUL about my final salary pension but I'm still not entirely sure of what I'll be entitled to and whether it's worth not transferring the pot. Guess I'll see what they come back with.

I left the university I worked at in 2013 (before the scheme moved from final salary to CARE) having been there for 4.5 years. My final salary there was circa £30k. Monthly contributions inc those from employer were around the £400 mark from what I recall.

@fromdownwest

Hood point re market volatility.

@hyperbole001

There are a few, but only a very few reasons which make it work transferring out of a final salary pension.

I'd encourage you to seek advice when you get the reply back from your pension provider on what your entitlement. By all means post here too, til you get it clear in your head. Good luck.

@hyperbole001 I’d expect around £1-5-2k per year from that one than. Hopefully SAUL can clarify for you

Sorry £1.5-2k per year

Thank you, I will certainly post back here when I receive a response from them.

Is it possible to open a LISA if you've already maxed out your ISA allowance on a stocks and shares ISA?

@Iamthewombat
I just checked the working there and it definitely says ‘plus gratuity’

I am in a different country so maybe that word means something else here. Thanks again for al the information, it really was so helpful.

@hyperbole001

Is it possible to open a LISA if you've already maxed out your ISA allowance on a stocks and shares ISA?

My understanding is that it's a £20K limit on all forms of ISA put together so if you've put £20K in an S&S ISA you can't contribute to a LISA this year www.moneysavingexpert.com/savings/lifetime-isas/

I think some companies allow you to transfer from a S&S ISA to a LISA but not sure that'll get you the govt bonus.

@hyperbole001

Is it possible to open a LISA if you've already maxed out your ISA allowance on a stocks and shares ISA?

You can open one cash ISA/LISA and one stocks and shares ISA/LISA in the same year I think. So you can't open an S&S ISA and and S&S LISA in the same year.

[quote 3luckystars]@Iamthewombat
I just checked the working there and it definitely says ‘plus gratuity’

I am in a different country so maybe that word means something else here. Thanks again for al the information, it really was so helpful.[/quote]
That's quite a significant drip feed

I don’t think so. I’m in Ireland, maybe gratuity has a slightly different meaning with regards to pensions here. The word means nothing to me. Sorry if you think I should not post on this thread, I didn’t think it mattered where we were from. Apologies if I wasted anyone’s time, but I am very grateful to anyone who helped me understand what a pot is.