Pension planning, so many questions with not enough answers?

stolt
stolt Posts: 2,865 Forumite
h everyone, i need some advice I have spoken to our accountant at work but his patience is well not too great.
ive spent alot of the last week looking at pension information online and realise i need to sort everything out and have a plan so i can plan for a good retirement.

Im 42years old i have work pension which is with Aviva the plan value is 138,868gbp it shows payments of 714gbp a month contribution from my employer which i need to check with my work because when looking on the yearly statement it shows 8601 payments but i cant see my payments. I know im on a salary sacrifice scheme so maybe thats why.

the plan is on the aviva mixed 40-85% shared s6.

avia let you go online and you can go for higher risk plan but ive been reading up and will do some more before taking the plunge on moving it because i know there is alot of risk but i dont want to leave it too late before going to a higher risk plan.

can anyone offer some advice on where to look for this advice and where i can break down where best to check which plan would be better for me.

my aim would be to retire at 60 and looking at what ive read to get a income of aroudn 20k a year the paln needs to be around 350k, i know in the next 20 years my plan will increase anyway. my wife hast worked for 10years and has a very small private pension so i will need something to support us both.
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  • AnotherJoe
    AnotherJoe Posts: 19,622
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    stolt wrote: »
    h everyone, i need some advice I have spoken to our accountant at work but his patience is well not too great.
    ive spent alot of the last week looking at pension information online and realise i need to sort everything out and have a plan so i can plan for a good retirement.

    Im 42years old i have work pension which is with Aviva the plan value is 138,868gbp it shows payments of 714gbp a month contribution from my employer which i need to check with my work because when looking on the yearly statement it shows 8601 payments but i cant see my payments. I know im on a salary sacrifice scheme so maybe thats why.

    the plan is on the aviva mixed 40-85% shared s6.

    avia let you go online and you can go for higher risk plan but ive been reading up and will do some more before taking the plunge on moving it because i know there is alot of risk but i dont want to leave it too late before going to a higher risk plan.

    can anyone offer some advice on where to look for this advice and where i can break down where best to check which plan would be better for me.

    my aim would be to retire at 60 and looking at what ive read to get a income of aroudn 20k a year the paln needs to be around 350k, i know in the next 20 years my plan will increase anyway. my wife hast worked for 10years and has a very small private pension so i will need something to support us both.

    The contribution "from your employer" you are seeing just means the amount that the employer transfers into the scheme. They dont separate out or distinguish (because they dont know or care) how much of that money came from you and how much from your employer). So lets say you pay £614 and employer £100. They will just show "£714 from your employer".

    What you are invested in looks to me to be a middle of the road scheme to me, with quite a high international spread so its probably done quite well recently, I'm sure others can comment how good it is ( of course that can only be compared to what you have a choice of, rather than agaisnt every possible fund there is)

    You could (??assumption here??) always hedge your bets a bit by putting some of your future contributions into another "riskier" fund in addition to your current one. Do they give you that flexibility? The trouble would be as a naive investor which fund to pick. My current company pension plan has 329 different funds across the scale from dull as ditchwater to hold onto your hat "woohah!" :eek: My previous employment scheme had about 10 choices (all of them rubbish :mad: )

    So perhaps do some investigation as to what other funds you have access to and if you can mix and match.
  • dunstonh
    dunstonh Posts: 115,904
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    h everyone, i need some advice I have spoken to our accountant at work but his patience is well not too great.

    Plus pensions are not really under the remit of accountants. A lot of them have mostly generic understanding nowadays and are often out-of-date on current pension issues (as is understandable).
    avia let you go online and you can go for higher risk plan

    It is not the plan itself that dictates the risk. It is the investment selection within the plan that does that.
    can anyone offer some advice on where to look for this advice and where i can break down where best to check which plan would be better for me.

    If you need advice then you are best getting it from an IFA. Not an FA.
    It is unlikely that changing your plan is going to be the best option. Your employer has to comply with auto-enrolment (AE) and most employers will only contribute to their AE plan. Not to your individual plan. So, you are likely left with the investment options within your existing plan.

    Aviva will offer simple multi-asset investment funds as well as a range of single sector funds. The fund range will depend on which version fo the product the employer is using for their auto-enrolment. Single sector funds tend to be used by more experienced investors or advised solutions using investment models.
    y. my wife hast worked for 10years and has a very small private pension so i will need something to support us both.
    Do not forget her pension. You can earn £22k a year between you tax free in retirement by using both of your personal allowances. If the planning is top heavy in your name, you may end up wasting some of her personal allowance.
    my aim would be to retire at 60 and looking at what ive read to get a income of aroudn 20k a year the paln needs to be around 350k,

    £350k is insufficient to provide £20k in real terms unless you are prepared for capital erosion or you are including the state pension in that figure (unlikely at age 60!). It may be that your modelling is a bit of both (i.e. the 60-68 gap with no state pension funded by yours and your wife's pensions with greater withdrawals with less taken once the state pension kicks in). So, understanding how you have modelled the £20k figure and whether this is net of state pension(s) and joint provision would be helpful.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • bigadaj
    bigadaj Posts: 11,531
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    Salary sacrifice won't differentiate between employer and employee, oh are sacrificing salary, so that doesn't get paid and everything is paid as an employer contribution, so including the tax and NI you would otherwise have paid.

    Increasing risk may well mean higher growth but can also lead to larger losses, the big increases recently with many funds are due to sterling devaluation, and that isn't something that will continue indefinitely.

    If you want to take a long term income of £20k in real terms then you'll need a far larger pot then £350k, current annuity rates would suggest soemthing around double that, using drawdown then you are probably looking at around £500000.
  • stolt
    stolt Posts: 2,865 Forumite
    thankyou for the replies. it seems i really still need to do alot of reading about pensions. very hard because it seems there is a ton of advice out there but very hard to work out what applies to me.

    i logged into my aviva account and you can change your investments and just a browse on the high risk
    i know this is probably a simple question but if i need to increase the pension pot to 500k how can i work out what my payments need to be.
    i will be mortgage free in 5/7years as im overpaying.
    right now i reckon i can put another 100 a month into my pension a month

    im sure the accountant said work put 10% into my account i will check tomorrow at work and ask him what my contributions are each month

    Fund name
    Aviva sector Risk Additional charges 1 Year 3 Year 5 Year
    Aviva Pensions AXA Framlington Emerging Markets S6 Emerging Market Equities 5 0.73% 25.8% 21.8% 27.5%
    Aviva Pensions BlackRock Aquila Emerging Markets Index Tracker S6 Emerging Market Equities 5 0.16% 33.2% 22.2% 31.6%
    Aviva Pensions BlackRock China S6 Emerging Market Equities 5 1.07% 3.1% 17.3% N/A
    Aviva Pensions Fidelity EMEA S6 Emerging Market Equities 5 1.14% 36.2% 17.3% 46.4%
    Aviva Pensions Fidelity Emerging Markets S6 Emerging Market Equities 5 1.03% 20.4% N/A N/A
    Aviva Pensions Invesco Perpetual Latin America S6 Emerging Market Equities 5 0.90% 48.1% -4.8% -10.0%
    Aviva Pensions JPM Emerging Europe Equity S6 Emerging Market Equities 5 0.78% 54.0% 3.5% 23.9%
    Aviva Pensions JPM Emerging Markets S6 Emerging Market Equities 5 0.83% 36.8% 27.4% 33.0%
    Aviva Pensions Jupiter China S6 Emerging Market Equities 5 1.09% 11.1% 19.8% 58.6%
    Aviva Pensions Schroder Global Emerging Markets S6 Emerging Market Equities 5 0.92% 33.5% 23.5% 36.2%
    Aviva Pensions T. Rowe Price Emerging Markets Eqty S6 Emerging Market Equities 5 1.17% N/A N/A N/A
    Aviva Pensions Threadneedle Latin America S6 Emerging Market Equities 5 0.94% 50.9% -4.3% -14.8%
    Listen to what people say, but watch what people what people do!!
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    edited 12 March 2017 at 7:14PM
    stolt wrote: »
    thankyou for the replies. it seems i really still need to do alot of reading about pensions. very hard because it seems there is a ton of advice out there but very hard to work out what applies to me.

    i logged into my aviva account and you can change your investments and just a browse on the high risk
    i know this is probably a simple question but if i need to increase the pension pot to 500k how can i work out what my payments need to be.
    i will be mortgage free in 5/7years as im overpaying.
    right now i reckon i can put another 100 a month into my pension a month

    Most likely (and almost certainly if you are a HRT payer), you'd be better advised to reduce or stop the [STRIKE]pension[/STRIKE] mortgage overpayments and put the money into you and your wife's pensions instead.
  • xylophone
    xylophone Posts: 44,010
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    Consider opening a pension for your wife - it appears that she has no relevant earnings but can still contribute £2880 per annum to a pension scheme and the provider will claim £720 in tax relief.

    http://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=0&adg=G+HLBS+HLS&gclid=CO_Q0bud0dICFUWNGwodjXsGRA

    http://monevator.com/category/investing/passive-investing-investing/
  • Triumph13
    Triumph13 Posts: 1,730
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    If that £20k pa is the spending level you want in retirement then stop panicking. Make sufficient voluntary NICs to get your wife a full SP - I'm assuming you will already achieve that yourself, but get forecasts and check.
    2 x full SP is £16k pa leaving you £4k short which would be covered by a fund of about £100k. Replacing the SP for the period from 60 to say 68 is roughly £150k so that's a £250 fund needed and you are well on your way to that.


    If you want £20k plus the state pensions then you may well need to save a bit harder (haven't run the numbers). As AnotherJoe meant to say, you may want to consider stopping overpayments to the mortgage and routing that money into the pension instead.
  • stolt
    stolt Posts: 2,865 Forumite
    thanks for the replies. Ive just been talking to my dad and my wife again and we have three daughters that are under 15 so at some stage we are hoping they will go through university and then maybe help them with a deposit for a house etc
    i keep reading about how much money you will need, ive done several calculators that suggest i really should be looking at 27k pension which means me trying to increase my pension payments.

    think im having a brain meltdown.
    Listen to what people say, but watch what people what people do!!
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    Triumph13 wrote: »
    As AnotherJoe meant to say, you may want to consider stopping overpayments to the mortgage and routing that money into the pension instead.

    Oops yes. Corrected
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    stolt wrote: »
    i know this is probably a simple question but if i need to increase the pension pot to 500k how can i work out what my payments need to be.

    Use a compound interest calculator to work out how much you'd need to save for 18 years to accumulate £150k (since you are already on track for £350k). Use 5% as the interest rate (fairly conservative). I make it around £450/month. Good news is, that is before tax so the difference in your pay packet would be anywhere from £350 to £250 or so depending if you are a high rate tax payer or not.
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