Private pension am I paying enough

jonestom

My Son-in-Law has been paying into a pension fund with Standard Life, since he was 17 years old, started off with around £30 per month increasing his payments yearly in line with inflation.

Two years ago he increased his payments to £100.00 per month. He is now 36 years old.

Does he need to increase his monthly payments or are they ok as they are, increasing with inflation of course.

He earns approx £23,000 per annum

Two other points, he works for a large supermarket chain and has been told their pension fund isn't very good so he's reluctant to move from Standard life, do you think this is a good or bad thing?

He takes advantage of his companies share option scheme to the maximum £250 per month and aims to continue with it as long as he works for the company.
Should he be doing this or is it better that he uses that money to increase his monthly pension payments?

dunstonh

Two other points, he works for a large supermarket chain and has been told their pension fund isn't very good so he's reluctant to move from Standard life, do you think this is a good or bad thing?

depends on the pension. If there are employers contributes into the plan then it's better than the SL pension. Nothing stops him running his SL pension along side it but he really needs to investigate the works pension ASAP.

Example, round here in Norfolk we have a large employer who is big in "bootiful" Turkeys Most employers there say the pension scheme is rubbish and chose not to join. It's just got this word of mouth bad reputation. However, the employer pays in 5% and it now goes to a Friends Provident money purchase scheme which has similar funds to that available on the FP stakeholder. You would not believe the number of people I have persuaded to join the scheme over the years.

jonestom

Thanks for the prompt reply, I'll have him look into the supermarket pension.

Hawksmuir

I was once told a quick rule of thumb was to half your age and use that as the percentage of what you should be contributing, maybe wrong but it is what I am sticking to at the moment.

exil

If the supermarket actually contributes to the pension fund itself, it's difficult to justify
refusing this free money. Nothing to stop you putting in the minimum to the supermarket scheme, and continuing with a personal plan as well.

Paul_Herring

Hawksmuir wrote:

I was once told a quick rule of thumb was to half your age and use that as the percentage of what you should be contributing, maybe wrong but it is what I am sticking to at the moment.

Opinion appears to be divided on whether this figure should be the starting point, or for the duration of contributions.

1/2 age as starting point (and continue with that percentage) to get 2/3rds at retirement:
http://www.thisismoney.co.uk/retirement/article.html?in_article_id=401663&in_page_id=6

1/2 age for duration (10% at 20, 20% at 40):
http://www.timesonline.co.uk/article/0,,616-1300863,00.html

That said, I'm not too sure this quick rule is still valid - I exceeded my projected pensions contributions for the past year by 50% and it has seen a neglegable(sp?) increase in projected pension when I hit 65 - almost as if the extra I contributed did nothing to increase it (in reality the projected annuity rates have dropped over the past year)