how much is in your pension pot and how long have you been putting into it

peterg1965

cvd wrote: »

And there is the prospect of a new annual allowance of about £40,000 which you could easily exceed.

I believe you are referring to the possible limit on annual pension contributions which would attract tax relief, not the total pension fund limit. If so, and it were £40,000, it would not affect me.

JoeCrystal

Considering I have not even start my pension though it should be all settled in few weeks, I am hoping to have roughly £5,000 by end of this year.

bristol_pilot

peterg1965 wrote: »

I believe you are referring to the possible limit on annual pension contributions which would attract tax relief, not the total pension fund limit. If so, and it were £40,000, it would not affect me.

I'm afraid you may be wrong. The proposed limit refers to both employer and employee contributions and for those in final salary schemes, because of the way the efffective contribution is calculated, a modest pay rise of 5% for example could easily see you breach the limit. You may end up begging your boss not to give you a promotion! (I'm in the same boat btw).

C_Mababejive

Batchy wrote: »

its so many 60ths depending on the benefits accrued, it will be based on final salary of employment, and this will determine tax free value. There is a superficial pot of assets, that will pay the accrued and known liability...
Major benefit being it will probably increase with RPI each year, certainly are gold plated.

Thanks..i think thats where I'm at.

I wonder what people think is a good FSPS annual payout at age 65 for an average working person?

sandsy

C_Mababejive wrote: »

I wonder what people think is a good FSPS annual payout at age 65 for an average working person?

The simple response to this comment is that final salary schemes were usually set up to target a pension of 2/3rds of final salary.

However, it's not quite that simple anymore. Final salary schemes were established at a time when people often joined a company for life and frequently worked 40 years for one employer (40/60ths giving you 2/3rds).

However, your average working person today doesn't do this. A few years with one employer, a few years with another etc etc etc. Final salary schemes have always penalised this person. If they transferred benefits to a new scheme, the transfer value always purchased less years than they had with the previous employer. And even if the pension was left as a deferred benefit, it became based o nthe salary at leaving.

In essence, at its extreme, if you had someone who moved employers each year, always in final salary schemes and leaving deferred benefits with the scheme each time they moved, they would effectively have had a career average pension scheme rather than a final salary one. This is effectively the same as someone who has money purchase benefits and contributes a fixed % of salary throughout their working lifetime. Of course, it all comes down to the actual %!

peterg1965

bristol_pilot wrote: »

I'm afraid you may be wrong. The proposed limit refers to both employer and employee contributions and for those in final salary schemes, because of the way the efffective contribution is calculated, a modest pay rise of 5% for example could easily see you breach the limit. You may end up begging your boss not to give you a promotion! (I'm in the same boat btw).

Nothing is clear as of yet, and I am not sure what you are suggesting may happen. The consultation phase is still ongoing. One positive in the speculated changes may give someone like me, with a guaranteed pension income (which would be above any mimumum figure), much more freedom with a drawdown USP. Hopefully that means I could draw more than the current GAD limit allows.

lisyloo

When I was 26/27 I devised a strategy. My aim was to be mortgage free by the time I was 40. I achieved it at 36. The next aim was to build up a wedge of cash (outside of a pension) and managed funds which would be my 'flexible' retirement money. I devoted the years 36-44 to that and got to where I wanted the amount to be.

Whilst I greatly admire what Bendix has done, it may not be the best model for most tradionally employed people e.g. people whose employers offers pension contribution matching.

If your employer adds to your pension you are better off taking advantage of that whenever it's available (this means each year).
If you pay higher rate tax you are better off claiming the relief whenever you can (this means each year).

I suspect Bendix has not been traditionally employed and either been self-employed or running businesses which may well change the whole tax regime.
It's absolutely not a criticism as what he/she has done sounds great. I'm just pointing out that a similar system may not work for everyone.

BeatTheSystem

Somewhere between 700-725 in a SSAS and SIPP.

Age 42. Like Bendix I had and have a plan.

Achieved through massive salary sacrifices and living sensibly.

The govt will in April close the doors for people like me as the amount you can put in will be limited to probably 40K p/a which is OK if you can start young at this kind of level which unless you are from the landed gentry you probably cant. I have only been able to seriously ramp up contributions in the last 10 years.

I am not convinced that if I had zero now I would start putting in at my time of life, I would probably put it into property and ISA's, I am also not convinced that Pensions are good for basic rate tax payers. The govt should allow the first 10K pension income tax free as an incentive to save as well as tax relief on contributions.

lisyloo

Somewhere between 700-725 in a SSAS and SIPP.

You mean £700K not £700 :eek:
Respect.

I am also not convinced that Pensions are good for basic rate tax payers.

If I might pick your brains.
What would you say if the employer matches contributions.
Personally I think it's a no brainer, but I'd be interested in your view.
I am aware of the illiquidity of pensions and I have other investments.

BeatTheSystem

lisyloo wrote: »

You mean £700K not £700 :eek:
Respect.



If I might pick your brains.
What would you say if the employer matches contributions.
Personally I think it's a no brainer, but I'd be interested in your view.
I am aware of the illiquidity of pensions and I have other investments.

Of course, I think if the employer is matching contributions then put as much as you can in. No brainer. In my case of salary sacrifice I was also able to get my employer to top up with employer NI savings. For a 40% tax payer the effective tax relief is well over 50%.

I have been very fortunate and I do think that basic rate tax payers need some further incentive to encorage them to save and if that means that 40% tax relief is taken away then so be it.

My concern is that people with modest pots in the final analysis do not end much better off than those that have nothing. Putting into ISA's and your primary property and downsizing later and if necessary hiding it under the matress might be better options for some.