Pension at 47

1425

I am about to take voluntary redundancy from the Civil Service and my pension will be frozen at 26 years service. I need to establish how much it will cost to make up the rest of my pension. Ideally I need to have an additional £8,000 a year pension to add to what I will get from my Civil Service pension in order for me to achieve an equivalent package at 60. I will need to achieve an income of £35,000 when I get a new job, but have no idea what % of this would need to go on pension contributions.

Can anyone give me a ball park figure per month or if indeed a pension is what I need (perhaps some other type of investment is needed to achieve this kind of income)

Grateful for any advice.

dunstonh

A rough guide to use for income is 5% of the capital value. i.e £100k would pay £5000.

So, £160k would be needed to pay £8000. However, you need to factor in inflation and use a realistic growth rate that would be appropriate for your level of risk. . If you are looking to retire at 47, then you cant use pensions, so you cant benefit from tax relief.

Cook_County

Rant --- I begin to understand why Cameron wants to cut out this nonsense that gave civil servants these kind of gold plated promises!

hugheskevi

Cook_County wrote: »

Rant --- I begin to understand why Cameron wants to cut out this nonsense that gave civil servants these kind of gold plated promises!

I think this is an unjustified rant.

The OP asked a perfectly reasonable question, and didn't give either their current salary (although we could reasonably assume it may be around £35,000) or their accrued pension.

Nothing in their post looks in any way excessive or unreasonable.

So I think it is rather unfair to rant in response to a sensible question about a pension on the pension's thread.

sandsy

You'd be looking to invest about £600pm (net) at age 47.

This assumes that you increase it each year in line with earnings increases and that you will take a level annuity at age 60, with no spouses pensions and no tax free cash from the fund.

You can play around with some numbers very easily on pensions calculators such as this one:

http://www.moneymadeclear.org.uk/tools/pension_calculator.html

CLAPTON

if you want an extra indexed linked pension at 60 of 8k pa (broadly equivalent to civil service) then you will get about 3% of you capital i.e. you would need a 'pot' of 8000/3% = £266,000 (check aout annunity rate for full inflation linking with spouse benefits)

so as a first approximation you would need to save a little less than 266,000/13 = 20,400 per annum (I haven't added any interest over the years, if you want a safe pension pot then you can factor in about 1% growth pa in real terms)

and yes one can make an observation that 'final' salary fully indexed linked pensions are very expensive.

gobezza

Have you thought about creating a SIPP and choosing your own investments to help bridge the gap?

hugheskevi

CLAPTON wrote: »

and yes one can make an observation that 'final' salary fully indexed linked pensions are very expensive.

One can make the observation, but I question making it as one of the initial comments to a sensible post by a new user. I think it makes the discussion board seem rather unfriendly, which a few new users seem to have been commenting about recently :undecided

CLAPTON

hugheskevi wrote: »

One can make the observation, but I question making it as one of the initial comments to a sensible post by a new user. I think it makes the discussion board seem rather unfriendly, which a few new users seem to have been commenting about recently :undecided

Obviously, you are well informed about the very high cost of providing a pension comparable to a final salary scheme.

Many people however simply can hardly believe the costs involved if being self financed.

We will have to disagree whether or not it's relevant and important to draw attention to the fact.

getmore4less

CLAPTON wrote: »

Obviously, you are well informed about the very high cost of providing a pension comparable to a final salary scheme.

Many people however simply can hardly believe the costs involved if being self financed.

We will have to disagree whether or not it's relevant and important to draw attention to the fact.

I know someone that has to set up pension plans for people coming out of the NHS system(outsourced jobs) the costs to provide cover even close to the NHS is significant often at least 30% of salaries.


So it may actualy be worth the OP considering jobs where the pension can be continued quite a few of the public sector schemes are interchangable.

yelf

gobezza wrote: »

Have you thought about creating a SIPP and choosing your own investments to help bridge the gap?

on what grounds would that be a good idea?