Don't Understand Pensions

shaz77_2

Hi All,

I have been rather foolish is dismissing pensions thus far in my life, I am not 27 and I earn £20,000 p/a. For the past 2 years I have embarked on a company pension scheme to which I contribute 3% of my salary towards and the company contributes 5%.

Below is a summary of my pension details, what does this mean and do I need to do anything? Please excuse my ignorance.

Thanks in advance

Start Date - 23.04.09
Total Premium - £3681.72
Total Value - £3907.94

Fund Name (UK Freeway pension) Current premium (40) Nominal Units (1,534.069796) Latest Price(£1.540) Fund Value (£2361.90).


Fund Name (UK Bond Freeway pension) Current premium (60) Nominal Units (1,092.413392) Latest Price(£1.415) Fund Value (£1546.04).

dshart

I don't think you are doing much wrong, you have started contributing whilst still relatively young so your pension pot will have time to grow to fund your retirement. Depending on your cashflow situation you could in future look at increasing your contribution percentage. Your annual statement should give you projected figures for when you retire in today's terms and this can be a guide for you to see if you are on track. Consider what you will need to live on when you retire assuming things like mortgage etc are paid off.

I am sure people on here who know more about pensions could advise better but I wouldn't worry too much as at least you are doing something for your future unlike many who either cannot or will not save for their retirement.

jem16

shaz77 wrote: »

Fund Name (UK Freeway pension) Current premium (40) Nominal Units (1,534.069796) Latest Price(£1.540) Fund Value (£2361.90).


Fund Name (UK Bond Freeway pension) Current premium (60) Nominal Units (1,092.413392) Latest Price(£1.415) Fund Value (£1546.04).




Fund NameCurrent Premium SplitNominal UnitsLatest PriceLast Price DateFund ValueUK Freeway Pension601,534.069796£1.54003/11/2011£2,361.90UK Bond Freeway Pension401,092.413392£1.41503/11/2011£1,546.04All Funds£3,907.94

Are you sure you have got the split round the right way? A 40/60 split would be very cautious - usually for someone older.

In the bottom part you say it's a 60/40 split which would be more normal.

Which is it?

Joe_Bloggs

I am not 27 either. If pensions and the world of finances are a murky mystery then shine a light by letting the rest of us know what is going on.
Do we get only one chance at the pension roulette wheel ? Can you chop and change to get better value. How accurate is pension forecasting ?

J_B.

atush

No, you don't get one chance. you get a chance every year (or in fact every month) to save in one/start one or not. It is never too late to start to save for retirment, although how much you can save and its impact on your future retired lifestyle will be totally dependant on how much and for how long you save.

It seems the OPs pension hasn't grown a lot over the last three years which is somewhat understandible when looking at recent market volatility. It is worth more than the money paid in (and that money does have tax relief uplift so the premiums he paid are less than what went in from his salary).

It is great the OP started so young, and that his employer pays in more than them (ie he pays 3% and his employer pays in 5%). But that is only 8% of salary, and would be a bit small even for a 16-18 yr old starting work. So as was said above, increasing the amt the OP pays in would be a good idea. It is easiest to do at salary raise time ie if you get a salary increase of say 3%, put at least 1/3 of that into extra pension contribs. But I would do it now and for more if you have enough left over each month.

I would look at the options you have of what it is being invested in (and if there are other funds than the one you mentionned and if you should re-apportion the money going in) and i would look at your overall financial situation.

Do you have debt? If so, pay it off. Do you have savings? Are they 6 months or more of your salary/spending? If not, increase them until they are. After that, save for future needs incl retirement but also cars, holiday, house, family. Use tax efficient savings where possible (ie cash ISAs, S&S ISAs, NSI ILSCs when they are available) and don't forget that over the long term, equities outperform cash.

shaz77_2

jem16 wrote: »

Are you sure you have got the split round the right way? A 40/60 split would be very cautious - usually for someone older.

In the bottom part you say it's a 60/40 split which would be more normal.

Which is it?

Sorry the last part of my original post should not have been included, the correct quota is 60% UK Bond Freeway and 40% UK Freeway.

jem16

shaz77 wrote: »

Sorry the last part of my original post should not have been included, the correct quota is 60% UK Bond Freeway and 40% UK Freeway.

You are doing well to have a pension.

However the 60/40 split with 60% in Bonds sounds very cautious for someone of your age. Did you choose this split yourself?

I would think you need to take another look at the funds available and see if you can increase the risk whilst you are still young to be able to cope with the ups and downs. Unless of course you really are very cautious?

atush

I agree with the above- not a split I would normally choose this early in life.

shaz77_2

I'm not overly cautious but when I was setting it up I didn't exactly know what I was doing. I'll contact the pension administrator and ask if this can be adjusted in the opposite direction?

What's the difference between "Total Premium" vrs "Total Value"?

JoeCrystal

shaz77 wrote: »

I'm not overly cautious but when I was setting it up I didn't exactly know what I was doing. I'll contact the pension administrator and ask if this can be adjusted in the opposite direction?

What's the difference between "Total Premium" vrs "Total Value"?

It may be that Total Premium is how much you paid into the pension scheme so far and Total Value is current value of the pension funds.

Cheers

Joe

jem16

shaz77 wrote: »

I'm not overly cautious but when I was setting it up I didn't exactly know what I was doing. I'll contact the pension administrator and ask if this can be adjusted in the opposite direction?

Ask what funds are available and come back and post them here. Someone may be able to help.

A 60%/40% Lifestyle option with 60% in equities would at least be better than what you have.

What's the difference between "Total Premium" vrs "Total Value"?

Total Premium is what has been paid in and Total Value is what it is worth now.