Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • toastersrock
    • By toastersrock 17th Mar 17, 11:52 AM
    • 3Posts
    • 0Thanks
    toastersrock
    32 and no pension provision
    • #1
    • 17th Mar 17, 11:52 AM
    32 and no pension provision 17th Mar 17 at 11:52 AM
    I am the first to admit that I have been negligent with my finances and the only item left on my list to tackle is to sort out a private pension.

    I have a pension through my workplace which I pay into but I am under no illusions that I am going to need to invest in a private pension as well. Thing is, I don't really know where to start and I am a little bit daunted when I have searched on the internet previously.

    How much should I be trying to achieve in my pension pot for example? I haven't got a clue so if anyone can help point me in the right direction it would be great, thank you!
Page 1
    • kidmugsy
    • By kidmugsy 17th Mar 17, 12:03 PM
    • 9,318 Posts
    • 6,110 Thanks
    kidmugsy
    • #2
    • 17th Mar 17, 12:03 PM
    • #2
    • 17th Mar 17, 12:03 PM
    Start by telling us what your current pension provision is.
    • toastersrock
    • By toastersrock 17th Mar 17, 1:09 PM
    • 3 Posts
    • 0 Thanks
    toastersrock
    • #3
    • 17th Mar 17, 1:09 PM
    • #3
    • 17th Mar 17, 1:09 PM
    Eeek, I literally have no idea. I have worked for my company for 8 years matching at 3%. I earn about 40k a year if this helps?
    • ChrisSargent
    • By ChrisSargent 17th Mar 17, 1:21 PM
    • 22 Posts
    • 1 Thanks
    ChrisSargent
    • #4
    • 17th Mar 17, 1:21 PM
    • #4
    • 17th Mar 17, 1:21 PM
    Eeek, I literally have no idea. I have worked for my company for 8 years matching at 3%. I earn about 40k a year if this helps?
    Originally posted by toastersrock

    I'm still new to all this pensions stuff but I would suggest you contact your provider and ask for a statement. Then you need to decide what kind of life-style you think you will want when you retire - bare in mind the cost of inflation etc. so that you are being realistic.


    Then find a pension calculator and use it to determine what size of pot you will probably need to give you what you need. From this you can see what kind of contributions you should be making.


    As you are only 32 you probably have another 35 years to go, although anything could change re legislation in that time.
    • toastersrock
    • By toastersrock 17th Mar 17, 1:46 PM
    • 3 Posts
    • 0 Thanks
    toastersrock
    • #5
    • 17th Mar 17, 1:46 PM
    • #5
    • 17th Mar 17, 1:46 PM
    Ok, thank you for your suggestions Chris. Sounds like a good place to start!
    • atush
    • By atush 17th Mar 17, 1:58 PM
    • 15,923 Posts
    • 9,667 Thanks
    atush
    • #6
    • 17th Mar 17, 1:58 PM
    • #6
    • 17th Mar 17, 1:58 PM
    some places to start are Cavendish online, and Hargreeves Lansdown- there are others.

    Open a PP, pay money into it monthly. For now, until you learn more about investing, forget the fancy stuff. Pick a global tracker or Multi asset fund to get diversification.

    Once you have 20K or so saved, you can move on to getting financial advice from an IFA.

    Dont forget S&S isas and LISAs too.
    • bigadaj
    • By bigadaj 17th Mar 17, 8:10 PM
    • 9,139 Posts
    • 5,840 Thanks
    bigadaj
    • #7
    • 17th Mar 17, 8:10 PM
    • #7
    • 17th Mar 17, 8:10 PM
    Ok, thank you for your suggestions Chris. Sounds like a good place to start!
    Originally posted by toastersrock
    Will the company match any more contributions, if so then that would be the best option. Also employer pensions can have very low cost so upping your contribution be a cheap option.

    In terms of sums then there are plenty of online calculators which will estimate what you might end up with at retirement, to give an idea then you could sustainably take around £4K per year from every £100k in your pot, so it's a lot of money.
    • BLB53
    • By BLB53 17th Mar 17, 8:28 PM
    • 1,030 Posts
    • 832 Thanks
    BLB53
    • #8
    • 17th Mar 17, 8:28 PM
    • #8
    • 17th Mar 17, 8:28 PM
    How much should I be trying to achieve in my pension pot for example?
    It will depend how much you want to retire on and when you want to retire. At 32 you probably should be looking to save at least 15% of your income...so ~£500 per month.

    Have a look at low cost sipp options and a simple all-in-one option eg Vanguard Target Retirement funds.

    Finally check out some of the pension articles on diy investor
    http://diyinvestoruk.blogspot.co.uk/p/pension.html
    "A low-cost index tracker is going to beat a majority of the amateur-managed money or professionally managed money" Warren Buffett
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 8:46 PM
    • 2,219 Posts
    • 343 Thanks
    JustAnotherSaver
    • #9
    • 17th Mar 17, 8:46 PM
    • #9
    • 17th Mar 17, 8:46 PM
    Sorry to hijack this thread but it may be a question that is also beneficial to yourself so i hope you don't mind ......


    You say you are under no illusions that you are "going to need to invest in a private pension as well"

    My question goes out to anyone 'in the know' - anyone reading this, why would the OP 'need' to invest in a private pension as well?

    Why would that be a better idea (since they admit that like myself they have no clue - which is why i'm interested in this idea) than lumping that money into their workplace pension? So instead of for example 10% to the workplace & 10% to the private they just put 20% to the workplace pension?

    • MoneySavingUser
    • By MoneySavingUser 17th Mar 17, 9:19 PM
    • 1,600 Posts
    • 642 Thanks
    MoneySavingUser
    Sorry to hijack this thread but it may be a question that is also beneficial to yourself so i hope you don't mind ......


    You say you are under no illusions that you are "going to need to invest in a private pension as well"

    My question goes out to anyone 'in the know' - anyone reading this, why would the OP 'need' to invest in a private pension as well?

    Why would that be a better idea (since they admit that like myself they have no clue - which is why i'm interested in this idea) than lumping that money into their workplace pension? So instead of for example 10% to the workplace & 10% to the private they just put 20% to the workplace pension?
    Originally posted by JustAnotherSaver
    They don't necessarily need to - some reasons could be:

    - Their employer doesn't let them put lump sums into the scheme;
    - Their employer's scheme has high charges so normally they should only put in enough to get the employer matching amount;
    - Their employer's scheme doesn't have the investments they want;
    - If they have a DB pension and extra contributions go to an AVC pot then there may be restrictions on when it can be taken (e.g. it must be taken at the same time as the main pension);
    - They want to put a small amount into a pot to take advantage of a small pot commutation lump sum;
    - They plan to leave their employer soon and want to perhaps reduce transfer out charges if they don't want to keep that pot in their employer's scheme;

    @toastersrock - have you been getting annual statements from the pension provider - if not request one.
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 10:11 PM
    • 2,219 Posts
    • 343 Thanks
    JustAnotherSaver
    They don't necessarily need to - some reasons could be:

    - Their employer doesn't let them put lump sums into the scheme;
    - Their employer's scheme has high charges so normally they should only put in enough to get the employer matching amount;
    - Their employer's scheme doesn't have the investments they want;
    - If they have a DB pension and extra contributions go to an AVC pot then there may be restrictions on when it can be taken (e.g. it must be taken at the same time as the main pension);
    - They want to put a small amount into a pot to take advantage of a small pot commutation lump sum;
    - They plan to leave their employer soon and want to perhaps reduce transfer out charges if they don't want to keep that pot in their employer's scheme;
    Originally posted by MoneySavingUser
    Thanks. I read that & tried to apply it to myself to see if there's any reason a private one alongside a workplace one may benefit me.

    I don't know what a DB pension is so i don't know if my workplace pension is one of those.

    But the only one i can see applying to myself may be the employers scheme not having the investments i want.
    Thing is, i don't know anything about it, so i can't say that i 'want' something, but i do wonder if i'm invested in anything worthwhile. When i got in touch with NOW Pensions the information was very wishy-washy, nothing specific.



    I think my pension with NOW Pensions through work is very middle of the park. I actually prefer to go with something a little on the riskier side. On a sliding scale of 1-10 i'd say a 7-7.5.
    So on that note i'm wondering whether it'd be worth keeping the workplace pension to a minimum & pay the remainder into an IFA-managed private pension.

    So for example i currently pay in 10% of my wage. So right now that would drop to 1% into the workplace pension and 9% into the private pension.
    Last edited by JustAnotherSaver; 17-03-2017 at 10:13 PM.

    • YorkshireBoy
    • By YorkshireBoy 17th Mar 17, 10:29 PM
    • 29,144 Posts
    • 16,945 Thanks
    YorkshireBoy
    I don't know what a DB pension is so i don't know if my workplace pension is one of those.
    Originally posted by JustAnotherSaver
    DB is 'Defined Benefit', as opposed to DC 'Defined Contribution'. DB is a rarity these days. With DB you know what you'll get, and the risk lies with employer (more accurately, their pension scheme). With DC, the risk is yours.
    So for example i currently pay in 10% of my wage. So right now that would drop to 1% into the workplace pension and 9% into the private pension.
    Many employers match your contribution (up to a point), ie they will match you up to 5%. You should ensure you maximise this benefit, and therefore limit the private pension contribution to 5%. Unless yours only match to 1%? If so, that's very poor!
    • JustAnotherSaver
    • By JustAnotherSaver 17th Mar 17, 11:10 PM
    • 2,219 Posts
    • 343 Thanks
    JustAnotherSaver
    DB is 'Defined Benefit', as opposed to DC 'Defined Contribution'. DB is a rarity these days. With DB you know what you'll get, and the risk lies with employer (more accurately, their pension scheme). With DC, the risk is yours.
    Originally posted by YorkshireBoy
    Ah. There's an old boy where i work who was telling me about his pension. I don't remember the figures but i do remember saying he was guaranteed something. So that'd be a DB then.

    Mine will be DC for sure then.

    Many employers match your contribution (up to a point), ie they will match you up to 5%. You should ensure you maximise this benefit, and therefore limit the private pension contribution to 5%. Unless yours only match to 1%? If so, that's very poor!
    My employer will only ever pay the minimum. If they could get away with paying nothing at all then they would. They're even postponing people joining by about 2 months.

    My wife's employer only pays in the minimum & will only ever pay in the minimum. They even tried to persuade staff to opt out (talk along the lines of no pay rise for people who stay in, although they have since had a pay rise actually).

    My sister's employer only pays in the minimum & will only ever pay in the minimum.


    Eventually i understand that the minimum contribution for me will be 5%. That leaves (at my current contribution 5%, although i would look at increasing it slightly if i could).

    Question really is whether to put that 5% into the workplace pension or whether to see an IFA to manage a private pension on the riskier side & put the other 5% into that.

    • Neasy
    • By Neasy 18th Mar 17, 6:30 AM
    • 58 Posts
    • 66 Thanks
    Neasy
    Hi there. I'm just responding to your point about why would anyone need to invest in a private pension as well as their workplace pension, and only from my own point of view as heaven knows I'm not a pensions expert.

    From my perspective, as I'm in a defined benefit (DB) scheme in which the pension I receive is reduced if I take before the age of 65 (or 67 for the more recent scheme), I want to have a separate pension that I could access before 65 should I decide to stop working earlier. Also, as my main pension is a DB scheme, I feel I am able to take on some risk with the DC component of my retirement planning.
    • ThinkingOutLoud
    • By ThinkingOutLoud 18th Mar 17, 7:51 AM
    • 1,229 Posts
    • 1,094 Thanks
    ThinkingOutLoud
    Eventually i understand that the minimum contribution for me will be 5%. That leaves (at my current contribution 5%, although I would look at increasing it slightly if i could).

    Question really is whether to put that 5% into the workplace pension or whether to see an IFA to manage a private pension on the riskier side & put the other 5% into that.
    Originally posted by JustAnotherSaver
    So as noted, there can be many reasons why a separate personal pension adds useful flexibility. But note the costs of a separate provision and compare. And check if your DC work pension is limited in all the ways suggested - it may well not be!

    But with respect to the questions asked before:-
    > you want something riskier - yet until just now you were not sure if you had a DB or a DC pension?
    > I am guessing have no idea what fund type(s) you current pension is in or could be moved into with your employers pension - start by understanding that!
    > also focus on working out how much you want in retirement - there are plenty of simple calculators out there via google to see what you will end up with
    > it is all very well saying you'd put more in if you could - but surely if not doing so would leave you thrice as poor in retirement as now - you may have to reevaluate today's spending (I know this can be hard reality today but maybe better than harder reality when you are 81)
    > assuming the sum of your and your employers contribution is sub 10% combined - this is likely to be less than is typically recommended (think half you age as a % as simple guide)

    Good to be here thinking about it though
    I am just thinking out loud - nothing I say should be relied upon!
    I do however reserve the right to be correct by accident.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

141Posts Today

1,788Users online

Martin's Twitter
  • RT @themiltonjones: Bother. Chucked out of Question Time.

  • Hmm I meant getting radical in my last tweet - having googled 'getting rad', I may not be in touch with t'lingo... https://t.co/t538UveBuz

  • Dimbleby becomes the Dimblebomb and kicks someone out. Question time getting rad #bbqt

  • Follow Martin