Pension help!

[SFHJ]

Hi, I have never really looked at my pension before, I’ve been hourly paid on NMW for years before a slight increase in wage (£1 a come minimum wage).
I got enrolled on my pension through my employer (now pensions), and it’s standing at about £3500. Is this good? Bad? Average? Desperately needing attention? I have no idea!

How do I go about increasing contributions/ how does it work in general? Would I be better off getting a different private pension? I don’t want to have to rely on my dh later on in life.
I’m feeling a tad overwhelmed and don’t know where to start!

You haven't said how old you are, do you pay into your pension or is it just your employer?

£3500 is minuscule, but how much you should aim to save depends on many factors, including your age, other investments you have (including home ownership), whether you are married and your husband's pension provision. What % of your salary are you investing in your pension? What % does your employer contribute?

Start by googling about pensions and getting some books from the library. Educate yourself and define your retirement needs and objectives. Work out how much you'll need to retire on. There are lots of pension calculators online to give you an idea of what you should aim for.

You've made a good start by actually looking into pensions. Unfortunately many people don't, which is why poverty in old age is such a huge issue.

If it is auto enrollment and you qualify then your employer will be paying 3% and you 5% (minimum). That 3% is money you wouldn't otherwise he getting.

£3,500 isn't going to go very far, but it's clearly better than £nil.

The main things to consider in choosing a provider are;

• potential growth (you can look at past performance as an indicator but it doesn't tell you what will happen in the future); and
• charges.

Given your employer has a scheme set up they are unlikely to want to admin bother of paying your contributions to a different provider, so that pot will likely have to stay where it is.

If you want to save separately then you can look at where would be good for your personal contributions.

@FredaFox

You haven't said how old you are, do you pay into your pension or is it just your employer?

I am 33

It’s the auto enrolment so I think I contribute some and my employer but could be wrong.

£3500 is bad if your 58. Having said that, it's also pretty bad if you're in your twenties

Pay more into your workplace pension - you get tax relief on it.

To work out how much pension you need tell us your age and how much money you will need to live on per year.

Does your DH have a pension?

Read through this to get a basic overview www.gov.uk/workplace-pensions

@ThisIsStartingToBoreMe

£3500 is bad if your 58. Having said that, it's also pretty bad if you're in your twenties

Pay more into your workplace pension - you get tax relief on it.

To work out how much pension you need tell us your age and how much money you will need to live on per year.

Does your DH have a pension?

I’m 33

DH has a pension but I’m not sure where that is at. He is a higher earner of about £45k plus annual bonus.
Currently if all goes to plan we will be mortgage free by age 49. With no intension of moving house. So aim then is to really boost our retirement funds.
We do both have life insurance with critical illness (Both lost parents to critical illness) and we have 6months of expenses saved with extra in bonds. Zero debt/ credit cards except for mortgage.

If you wanted to take £15,000 out of pension each year when you are retired, based on a 3.5% withdrawal rate you would need a bit over £428,000 in the pension at retirement.

So £3500 is not great but it is a start. As your income increases, if you increase your pension contributions you will see your pot of money rising. I am mid 40's and have a bit over £150k in retirement funds.

Keep in mind that your pension money goes up and down in value and over a long period of time you anticipate that it will go up, probably doubling in value every decade.

Keep paying in to your workplace pension whilst you have an employer contributing. Do not miss out on that free money from your employer.

It's a miniscule amount and will pay next to nothing in a pension.

It's tiny, I think they say roughly take 4% a year out of your pension so if stayed at that amount (which clearly it won't!) it would give you £140 per year.

You need to be paying as much as you can in. Also please don't rely on your husbands pension, at 33 anything could happen in the coming years.

For someone earning NMW, the replacement ratio of state pension to earnings is pretty good, so you don’t need to panic.

Your employer may offer the chance for you to increase contributions and they might match it or contribute more than they currently do. If you can afford it, it’s always good to get free money.

Please don't wait until you've paid off your mortgage to pay into a pension.

If you wait until you are 49 you are missing out on 16 years of compound growth.

Also check how many qualifying years you have towards your state pension. You now need 35 years of meeting the NI conditions to get the full state pension

Oh I don’t plan on waiting, which is why I want to address it now.
Will look at the above.
After new year when they payroll reopens at work I will look to see if I can maximise my pension contributions and see about what would be realistic to add to it out of our family budget.
Will also get my dh to look into his, he’s just taken on a new job role which comes with an increase so will make sure he is maximising his as well.