Pension Pot?

RichardS

I'm 39 and my pension pot is currently £45,303 (got my statement today).

Just wondered how that compared to other people? I realise it's pretty small and I need to contribute more but I just wondered how bad it was compared to other people?????

I have a Managed Fund Stakeholder (Standard Life) and my contributions (inc my employer's) is £240 a month gross.

What's your pot like and how much do you pay in??

dunstonh

That pension pot would give you £2500 a year income if you were 65 now.

You have a good pension provider in SL who operate a great personal pension. Stakeholder isnt bad but not as good. Even so, they offer far better funds than the bog standard, rather poor "managed" fund.

Your current contributions with half decent growth would get you to around £15-16k a year if maintained to age 65. Keep the contributions in real term value (i.e. increase with inflation) and get a better fund range and you should be ok if you were looking for that sort of income.

RichardS

Hi, thanks for that. Two questions though.

1. When you say "get a better fund range" are you suggesting I contact SL and ask them to move me from the Managed Fund to something else? I know very little about funds etc and I am also not prepared to go very high risk. Thanks for any advice you can give.

2. Interested in your projected income because on my statement Standard Life say I could get an income of £6,920 + £1710 (from payments I have made to replace additional state pension). You project much higher - is that because with your projection you are allowing for my contributions to increase by inflation and they don't ?

Richard

dunstonh

1. When you say "get a better fund range" are you suggesting I contact SL and ask them to move me from the Managed Fund to something else?

Yes. Although they are not able to give you any advice on what to choose. Just a list of what is available.

I know very little about funds etc and I am also not prepared to go very high risk. Thanks for any advice you can give.

You could build a much better portfolio within your risk profile which gives higher potential for growth. The "managed" fund is an old way of investing. Whats that saying, a jack of all trades but master of none.

2. Interested in your projected income because on my statement Standard Life say I could get an income of £6,920 + £1710 (from payments I have made to replace additional state pension). You project much higher - is that because with your projection you are allowing for my contributions to increase by inflation and they don't ?

Standard Life use SMPI basis projections and not monetary growth rate projections. They assume 2.5% inflation on the figures they give you. I have used monetary growth basis and said to keep the contribution up with inflation instead.

Basically, SL are telling you that if you remain at your current level of contribution you will get £6920 (ignoring protected rights) in todays terms. If you were to increase your contribution by inflation annually, you would get more than that.

RichardS

Thanks again for that - I appreciate the advice and help.

So what funds would you recommend ??? :-)

EdInvestor

RichardS wrote:

1. When you say "get a better fund range" are you suggesting I contact SL and ask them to move me from the Managed Fund to something else? I know very little about funds etc and I am also not prepared to go very high risk.

Here's some information about the Standard Life Pension managed fund:

http://www.trustnet.com/pen/funds/?fund=42

85% of the money in this fund is invested in stockmarkets - UK, European, American and Asian shares.

Would you regard that as low risk?

dunstonh

So what funds would you recommend ??? :-)

Cant do that without PAL editing the recommendations out. and me getting a slapped wrist.

All i would say is choose 5 or 6 of the alternatives to spread across the sectors with percentages appropriate to your risk profile.

isasmurf

RichardS wrote:

I'm 39 and my pension pot is currently £45,303 (got my statement today).

Just wondered how that compared to other people? I realise it's pretty small and I need to contribute more but I just wondered how bad it was compared to other people?????

Not that small. According to HMRC statistics, only 340,000 people out of 9.4 million that have a Personal or Stakeholder Pension have a pot bigger than £50,000!

EdInvestor

Step one is to decide on what asset allocation is best - what proportion of your money should go into equities ( higher risk and lower risk), commercial property, bonds and cash.

This asset allocator should help:

The choice is mainly affected by your age and risk profile.

Calculator

(This is American so for UK usage property should be considered in the same class as bonds).

When you've decided on the allocation, you can go on to choose the relevant funds, so get a list of which funds are available from SL in the meantime.

Pal

dunstonh wrote:

Cant do that without PAL editing the recommendations out. and me getting a slapped wrist.

Indeed.

RichardS

But if I just stick with the Standard Life Stakeholder Managed Fund, how much could I potentially lose out on? Presumably if I stick with it, it's not a disaster? I chose the Managed Fund because I know nothing about investment and I thought it was best to leave it to people that did - hence the "managed" bit??????