Pensions

[ManchesterBea]

Hello everyone,

I'm trying to get a sense of where I should be with my pension. For various reasons; employers not needing to provide pensions due to contracts, and being self-employed, I have very little in a pension pot. I am early 40s.

Due to my income, I do have disposable income I can save, and I would really love to get my pension pot to the average for my age.

However, I can't really find much information online!

If you have a pension pot, do you know how much you have in it? If you're around my age.

I'm on track for full state pension. I'm already mortgage free. So I'm lucky in that respect!

I'm currently saving 500 a month into pension. (But this has only been for the last couple of years!)

Hi OP

May I ask how much you earn each year? Is this an employer position? If so does your employer offer a salary sacrifice scheme? If self employed is it through a ltd company?

Approx 65,000 and it's all personal pension. Short contracts and self employment mean often they aren't required to pay 😊

When I am in a longer contract, I then do get a pension through the employer, but I always consolidate those into my personal one.

Wow - that complicates life! Are you an employee on the books of the company which hires you, and agency or something else?

Sorry to ask boring questions - the tax position matters a lot.

I’d get some professional advice personally. I have a civil service pension and all being well with have 45yrs service if I work until 67. That should give me around 180k lump sum if I take 100% lump sum (as that’s tax free) and 15k a year I think. That’s not accounting any promotions and I’d like to maybe do one more but don’t think I’ll want the added stress of anymore after that. I don’t have a mortgage yet and I’m 47, due to being a single parent living in the South East. I do want to try and whack a bit more in my pension as I am 40% taxed too and I was part time for 10yrs due to health issues and also due to that I might not be able to work until 67. 2.5yrs and I’ll be leaving the south east when youngest child goes to Uni and will get mortgage started up north, but hoping to get something small and have that paid off before retirement so I don’t need lump sum for that. Will obviously get full state pension and should be fine. My mum lives off a small private pension, small widow pension and state and she manages to save money every month.

Gosh this has made me so depressed! For various reasons I only have £10k in my pension pot at the age of 41. Have recently upped to max employer matched contributions (8%) but with two young children I can't afford to put in anymore :(

When it is suggested to save percentage wise approx half of the age you started saving for a pension, does that include the employer contribution. So if for example you start to seriously save in to your pension age 40, it is suggested you save approx 20% of your gross salary. For me (I am PT and my pro rata salary is £33k) that equates to £550 per month to save including what my employer is putting in?

Ah mate! I get this completely, don't forget that the people that tend to comment are the people who are fairly sorted pension wise. There are plenty people out there who won't have as much in the pension pot, it's a bit like the threads about savings, it's always some people who have tons of savings that tend to comment!

@winnie1980

Yes, the percentage (e.g. 20% aged 40) does include the employer contribution to your pension. That should take the pressure off a bit, depending on how generous the employer contribution is.

@winnie1980

At the moment, the average pension pot on retiring is around £100k. As pp says mumsnet posts on pensions/savings tend to attract those who have them.

I'm the same age as you and have around £12k in my pension. I'm never going to be able to save enough to retire early and spend the following 30 years participating in expensive holidays and travel but I should be mortgage free and with what I save, plus state pension (assuming it still exists) I should be sufficient actually retire (which many our age won't be able to do).

National insurance reduces this month, I'm only about £10 a month better off but I don't need it so that extra amount is going into my pension.

I think you're in a good position OP because you're mortgage free. Many people are trying to pay off mortgages and build a pension at the same time.

You can really throw everything at it now and it's tax efficient.

@jayritchie self-employed, so not on the books exactly, I invoice on monthly basis.

Not sure if this is the same for everybody's pension contributions, but the great thing is I can set pension contributions against tax, I also get the standard government bonus of 25% on top. This explains what I'm badly explaining ☺️

www.legalandgeneral.com/retirement/pensions/pension-tax-relief-benefits/#:~:text=For%20every%20payment%20you%20make,tax%20relief%20back%20to%20HMRC.

Thanks @OhamIreally 😀

What I find annoying is no two calculators project the same income in retirement, but the general rules are, contribute as much as you can up to the 60k/yr limit, aim for an income 50% of your current gross, and multiply by 20 to estimate the pot size you need. Put the tax free 25% into isas and use that first so the pot keeps growing. When you do drawdown, keep the balance well invested so it lasts longer.

I'm 39, 200k in the pot, mortgage free, 160k in isas. Now doing about 55k/yr into the pension now that mortgage is gone, which is 50% from pay between me and my employer and 50% bonuses.

Plan to retire at 57.

Yes. That’s how pensions work for everyone. Tax free on way in, taxed on way out.

@OneMoreTime23 Tahts right ☺️