Is it normal for my pension income to exceed my salary?

[Oldtowel]

I recently worked out my pension (combo of state, private and work) is worth £57,000 a year. This might not sound like a lot but I currently earn £45,000 a year. It struck me as strange that my pension is more than my current salary. I started my private pension in my early 20s and am now mid 40s so have been contributing a long time.

Everyday currently feels like a slog and the money doesn’t go far. I am working hard on trying to increase my income but not making much progress.

I am still 20 years off retirement so there is still hope for progression but at the moment it seems so strange that I have to wait for retirement to be better off.

Am I doing it all wrong and putting too much money in my pension pots? Or am I deluded and this is actually a measly pension?

It's a very big pension, but is any of it, apart from the state pension, index linked? If yes, you could stop contributing and have more money to spend now.

Do you mean projected pension at retirement age? 68? If you’re 20 years off and could already draw that amount that would be incredible for someone on your income!

My pension ( I'm 67) is more than I ever earned. I worked for a charity. Its invested well and pays £36k a year plus state pension

Doesn't sound like a lot ! Are you taking the Pee?

Most people expecting a decent pension would just retire earlier. Take a lump sum, pay off mortgage, downsize etc. or go part time when older. You do know that £57k is a massive pension?

My biggest pension is a private pension which is invested in markets so could decrease I guess?

I suspect that is projected. But entirely possible. That's a defined contribution fund of about £1m. You might have done final salary pension.

I started workspace pensions early, and put in some AVCs in my 20s. Compound interest is doing its thing, and as long as stock markets don't crash, by the time I retire I hope to have a similar income to your annual number.

Yes projected for 20 years. I could take a lump sum of some of it at 55.

Yes it’s projected, I have AVCs.

No, I’m genuine, £57 is a lot to me. Especially if my mortgage is paid off as well by then.

I am pleased to hear that it’s a massive pension. I really have no idea. Then someone else on this thread is saying it’s not a lot. I guess it’s all relative.

So it’s defined contribution? If so, it won’t be worth that now. It’s a projected worth that may or may not be worth that much in 20 years (although with 40 years invested by then, there should be a good return). You should be able to take it from 57 years old but won’t get your state pension until 67 (and this age may rise in the future).

Depend how investments do - I've retired but not touched my drawdown pension yet- it's gone up 33% in less than three years.

I think it's quite possible if you invested in a private pension in your 20s that was in an all world type fund (or better achieving) if you put a reasonable amount away every month or added big lump sums. Compound growth is insane.

Is the assumption also based on if you kept contributing at the current rate until 68 or if you stopped contributions now?

And yes £57k is a massive pension. I suspect most would be happy if they had £27k ish in pension (equating to around £2k a month net) assuming housing is paid off.

It will be at least 57 by the time you are able to take it.

It's unusual, yes

Is it DC you are talking about? Or a combination?
If DC, what is the actual balance now? It may assume you are doing to continue paying in at your current rate until 67/68 and include that. It does all depend on the assumptions used in the calcs.

But I would definitely be running the numbers and aiming to stop before SPA if I were you.

P.s. if you have 20 years to go, you won't be able to draw at 55, it's going up to 57/58 so if you want to stop before then, make sure you have sufficient in ISAs or other to cover.

Sounds a lot to me. Mine will be state pension. Maybe £20,000 lump sum that's it.

You must be if you don’t consider that a lot!

Hi OP. That does sound high. I have a 'good' pension so I am often told and my projected pension is roughly half my current salary (if I take the small lump sum). And I think my state pension age is 68 now.

I do have a small private pension from a previous job which is worth about 34k total and I believe it's protected so I can take that at 55. I worked there 11 years. I do need to get pension advice as I've no idea what's best to do with the smaller one.

What are you waiting for? Spend it!

So your ''pension pot'' is about £1m?

I think it's a lot in the sense that I expect most people who are on track to receive pension income far in excess of their income when working would retire early instead.

That sounds huge, and I'm not quite sure how that works out.
Me and DH are projected to get less that £50k between the two of us.

Does that projection include the state pension?

I would imagine it also assumes you continue to make the same % contributions and you get pay rises over the years.

worth checking their assumptions before you make any changes!!

My NHS pension is 1/2 what my salary was. I paid in for 37 years.
I have a while to wait for state pension - it will be reduced because of my NHS pension. The 2 combined will not make up my salary.
To be honest I'm fully expecting the State Pension to be means tested by the time I'm eligible. If it is I'll be in trouble.
Are you sure your calculations are correct OP?