Growing Daughter's Pension

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GSP
GSP Posts: 887 Forumite
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in Pensions, annuities & retirement planning
My daughter is 23 and not long into her working life and paying £140 a month into her workplace pension, which is being matched.
Call it £300 a month times by 12 that's roughly £3.5k a year going in.

After ten years that's £35k, £70k after 20 years so just over £100k in thirty years time.
Doesn't sound a lot does it.

Looking for advice how to grow the pot. Understand for the young its best to do riskier investments in the early years, and moderate risk as near retirement age.

Don't know what type of pension she is in, but what is the best thing to do to try and grow that pot.
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  • Theta101
    Theta101 Posts: 140 Forumite
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    £3600 per year for 30 years with 5% annual return equals £254,739
  • GSP
    GSP Posts: 887 Forumite
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    Where does this 5% growth come from Theta101 thanks
  • gardner1
    gardner1 Posts: 3,154 Forumite
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    GSP wrote: »
    Where does this 5% growth come from Theta101 thanks

    If you don't know how the 5% growth comes into it perhaps it's best to leave well alone
    In 30 years time it may be more than Theta101 quoted as no doubt your daughter may increase contributions
  • Theta101
    Theta101 Posts: 140 Forumite
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    Your daughter's pension fund investments.

    "For most of the past century, anyone investing for a 30-year period has been rewarded with a return in excess of inflation of between 4pc and 8pc a year..."

    £3600 / year for 30 at 4% equals £213,582
    £3600 / year for 30 at 8% equals £444,045

    She's doing ok at her age I'd say.
  • Number75
    Number75 Posts: 205 Forumite
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    She's 23 - time to take ownership of it herself! She'll take steps to grow it herself if she understands and is engaged with it.

    How have you planned for your retirement? Share that with her - the good and bad, what's been successful, what mistakes you've made.
  • GSP
    GSP Posts: 887 Forumite
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    Will growth happen if she leaves it where it is? Does every dc pension fund grow?
    I thought it needed investment into areas where it could go, i.e. Equities so it could grow more quickly (obviously over time as there will be falls as well).
  • System
    System Posts: 178,094 Community Admin
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    GSP wrote: »
    My daughter is 23 .


    Still growing? She must be a big girl.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    The money that your daughter and employer pay onto the pension goes into funds. Those funds can gain or lose value. If your daughter invests sensibly she might expect to get 5% annual return.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • GSP
    GSP Posts: 887 Forumite
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    Bostonerim... My daughter is contributing through her works pension.
    When you say investing sensibly, how would she know if her workplace was investing sensibly as this has been arranged by them. Thanks
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    GSP wrote: »
    Bostonerim... My daughter is contributing through her works pension.
    When you say investing sensibly, how would she know if her workplace was investing sensibly as this has been arranged by them. Thanks

    Most comoany schemes will invest into a default fund which will probably be uk focused and in mixed investments, check with her employer or provider and they will have the details. The actual fund can then be found on the trustnet or Morningstar website if you want to monitor it and the investments, most schemes will also have alternative funds she can invest in which might be higher growth but more risky.

    You or her should have a read through the monevator website to get some background on investing, whether in pensions, isas or unwrapped, there's little difference apart from the tax treatment.
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