Are these pensions rubbish?

[PensionQuestion2024]

DH & I are both 44 and have a private pension each. After recently paying off our mortgage I wanted to check our pension situation and increase our contributions of necessary as we have some spare cash.
So they are:
Me £90k, I pay 15%, £270 and company pays 5%,£96
DH £50k, he pays 13%, £405 and company pays 3%, £80

I pay a big percentage because I'm PT and unlikely to work full time again, and if I did it wouldn't be my curse company so could be lower paid. DH was quite late to the pension party (prob 30 when he started paying in properly)

It's hard to know what to do for the best because pensions are so intangible whereas having money in savings (currently £15k) and being able to afford nice holidays is so much more 'real'

So wise vipers, should we be putting loads more in?!

I would look at the online pension calculators. This can give you a good idea of what you will get when you retire with your current pot and current contributions.

Just to check the details. When you say ‘private pension’ do you mean your work (occupational) pension or do you have a work and personal pension? Are these your only pensions or might there be e.g. older work pensions you paid into in the past? Have you checked your state pension forecasts?

Sorry, yes these are work and only pensions.
I've only checked that I have paid enough NI to qualify for a state pension (I do)

I'm a little confused. If you have 20% going into your pension, on your salary, that's 18k a year, or 1500a months, assuming monthly paid. Where does the 270 and 96 come from? 18k a year seems fine to me, though if you also have no mortgage, I'd be tempted to either up, or do something else long term savings/investment wise.

I think the 90k is the total in the pension, not her salary.

I read it that she has a pension 'pot' of £90k and is contributing £270 +£96 from her employer each month. This is 15% of her (part time) salary from her and and additional 5% from her employer.

Try putting your figures into some different pension modellers and see what they say

eg https://www.pensionbee.com/pension-calculator

be very careful to check assumptions - eg are they considering the money you put in to be gross or grossing back up for tax? What return rates are they assuming, etc. that’s also why it is worth looking at several

Definitely put more in if you can afford it. The tax relief and investment growth will make it really worthwhile.

Otherwise the money you're not paying on your mortgage will all go on 'lifestyle' and then you won't be able to continue that lifestyle when you want to retire.

Providing your jobs are secure, you have a reasonably healthy emergency fund, although it won't go far if you want to do home improvements or replace your cars.

So perhaps increase your (non pension) savings, but also put at least half what the mortgage was into your pensions, leaving some to improve your current day to day life now - but don't waste it or spend for the sake of it.

I am going against the advice and say DONT put more in. The tax relief is not going to make a difference as it will be taxable income later (Bar the 25%) but it will be tied up to be released only at pension age. If your company doesn’t match higher contributions I would save the money privately and invest it privately in an ISA. Much more accessible, also has tax benefits but if you want to retire early or access the money early you have this to draw on.

Oh I see! In that case, I would up my contributions, on basis if I didn't spend it because I was paying mortgage, I won't miss it now. Maybe use part for "fun" but rest into pension. Check out the effects of compound interest using what growth rate you're expecting. E.g. my pension is currently growing at 8% (not inc. contributions), so if I pop the current pot value plus 8% in a compound interest calculator, it's a good indicator of what it could be worth in 10, 20 years time

If I were you I would do this:

1. First really understand your current position. Get your state pension forecast https://www.gov.uk/check-state-pension . Then make sure you understand your current pensions and what's in them. It sounds as if your have made good progress with this but make sure that you know whehter your employer will contribute any more e.g. by matching increases. Also, check what your current funds are invested in and whether you are happy with that - often the default fund can be quite conservative. Finally, what charges are they making (it shouldn't usually be more than 0.75%).
2. Then work out what you think you'll need. There are a couple of sites that give some research on what people spend e.g. https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9 and https://www.retirementlivingstandards.org.uk (though the latter I'd take with a pinch of salt as it seems a tad high). These might be a helpful starting point but you know your own situation better.
3. Finally work out whether you're on track to get there and how best to do if if you're not. A PP linked to a pension calculator and these can be useful for working out what might happen if you continue at the current rate. As Woodstocks says, once you've contributed enough for the employer max you might want to consider whether to invest in a S&S ISA as well.

I hope that's a helpful starting point. I wouldn't say your pensions are rubbish at all (many people have much lower) but it's a good idea to look carefully now to plan how you're going to get where you want to be in the future.

Thanks everyone.

Using the links shared I checked our projections & if we take £16k each it would last until we were 100+ so I don’t feel an immediate need to increase our contributions.

so I’m going to set up a standing order for half of the mortgage payment to my ISA & DH will do the same once next year’s holiday is paid off in Jan (about the same amount)