Pension - does this sound right?

[hotandwanttoswim]

I'm really trying to get my head around pensions but it's very confusing.
I am 41 and I had a job between the age of 24-26 that paid something like £24k at the time. I just worked there for 2ish years. I was paying into a pension that I forgot existed. I just called the pension company and the guy I spoke to sounded a bit vague but they seemed to be saying I have £24,000 in this pot that I could potentially take as a lump sum on retirement. Does this sound right from a low-ish paid job I did for 2 years? It sound like more than I was expecting but I am pretty clueless about these matters.

Just to add I have worked since then in a different job and also have a reasonable pension from that - I was just curious about how much this other pension will add to it?

Let's say you paid 7% and your employer paid 7%. That would be £7,000 in contributions over the two years.

To reach £24,000 over 15 years would require annual growth of about 8.5%

Those figures (the contributions and growth) are at the high end of the likely envelope but it is feasible.

And the Gvt would have contributed 20% tax repayment.

Did he mean it stands at £24k now, or is forecast to be worth that when you reach state pension age, or at the date you are entitled to cash it in (currently 10 years before state pension)

its worth the 24k now....
and will hopefully grow over the years

You can probably expect that £24k to double at least in the time until you hit pension freedom (57?).

But if you took it all in one go you would get hit with income tax, so likely better to spread it over a few years to make sure you avoid any 40% tax.

Yes he meant £24k now

Call him back, request a forecast in wiring or a statement and then ask again when you’ve read it if it still isn’t clear. Don’t manage your future finances based on a phone call with a vague employee.

Call him back and ask for a written illustration to the scheme retirement age. Is it defined benefit or defined contribution? Also, who's it with? You may be able to access it online.

Advice these days is to try and consolidate pensions into as few pots as possible to make admin and control easier. However you need to make sure the pension doesn't have any guarantees that you'd lose. Meaningful Money podcasts are really good and there's a Facebook group with loads of people who will answer questions.

£24k a year off two years' payments isn't unfeasible but I'd say it was unlikely. Also you can take up to 25% of your fund tax free so I imagine that would come out before they calculated the annual pension.

Its not £24k per year, that would be ridiculous! £24k in total and I have no idea how much that would be a year but maybe £100-200 which is not a huge amount but not bad for a job I did for 2 years and then forgot about.

It sounds possible ish. I have over £10k in a pot (last time I check, a while ago) from a job I did in my mid twenties for maybe 18 months. Was earning about £35k a year though I think.

I keep forgetting about it as have been in public sectors ever since so healthy pension pot from that!

It is possible. Based on MLM's calculations, 8.5% per annum growth over the last 15-20 years is very doable. Quantitative easing over this period has massively boosted assets prices. If the pension was invested in the US or Worldwide equities, it would have performed pretty damn well over that period.

I remember looking at my pensions and being shocked at how much it had grown. I mean sometimes 2-3 times its initial value.