Can someone help me work out my pension entitlment at the end please?

BrettMorganxD

I am only 19 but planning ahead. I am planning to join a company pension as it has been advised by the majority of my pension now that I am eligable.

I have done a calculator on 3% of my salary per month (£11,278 per annum, will go up in a year or so).

And it came back as I am only entitled to £126 pcm that would of been a waste of 48 years worth of paying would it not?

So based on 3% using the salary above as an example what lump sum and monthly income wouldI get.

My employer makes matched contributions

dunstonh

I have done a calculator on 3% of my salary per month (£11,278 per annum, will go up in a year or so).

And it came back as I am only entitled to £126 pcm that would of been a waste of 48 years worth of paying would it not?

On what basis did you choose to calculate? i.e. todays terms or future money terms.
What type of income did you choose to illustrate on (sole, joint, indexed, level etc)?
Did you illustrate with or without tax free cash taken?
What growth rates did you use?

BrettMorganxD

dunstonh wrote: »

On what basis did you choose to calculate? i.e. todays terms or future money terms.
What type of income did you choose to illustrate on (sole, joint, indexed, level etc)?
Did you illustrate with or without tax free cash taken?
What growth rates did you use?

Retirement age 58. Single pension, not for spouse or partner. Not taking the lump sum cash came out at £158, taking £123.

CLAPTON

well if you pay in 3% of 11,278 that's about 338 per year or £28 per month
if you continue to pay that in for 49 years and lets say expect to get your pension for 25 years then you would only expect to get about

£28pm x 49years/25years = £55 per month as a pension in todays money

now in practice there would be some growth in your fund over the years due to profit but basically if you pay in peanuts you will get out peanuts

maybe your employer will pay in money as well and of course you may well increase your salary over time but you need to think round minimum of 10% to get a decent pension

dunstonh

Retirement age 58.

That is 10 years earlier than your current state pension age. Your contribution is not big enough to cover that gap and is therefore unrealistic.

Was the pension increasing annually or level basis (staying the same each year)?
Did your contributions increase each year or did you assume the amount stays the same for the whole 48 years?
Is the pension figure in todays terms (i.e. spending power today) or future terms (£123 will buy you a mars bar in 48 years time)? I guess todays terms which would account partly for the lower figure.

gadgetmind

BrettMorganxD wrote: »

Retirement age 58. Single pension, not for spouse or partner. Not taking the lump sum cash came out at £158, taking £123.

Retiring at 58 is *not* easy and requires pretty big sacrifices, which your current salary really doesn't let you make. However, you need to ensure you get that 3% from your employer so don't be tempted to back out.

Worst case, your salary doesn't pick up, you have to work until state retirement age, but this pension gives you a roughly 50% boost over the basic state pension. Not bad for less than £30 a month gross right now.

Maybe your payroll people will tell you how much less there will be in your pay packet if you go for this? I'd guess it'll be less than a fiver a week.

atush

gadgetmind wrote: »

Retiring at 58 is *not* easy and requires pretty big sacrifices, which your current salary really doesn't let you make. However, you need to ensure you get that 3% from your employer so don't be tempted to back out.

Worst case, your salary doesn't pick up, you have to work until state retirement age, but this pension gives you a roughly 50% boost over the basic state pension. Not bad for less than £30 a month gross right now.

Maybe your payroll people will tell you how much less there will be in your pay packet if you go for this? I'd guess it'll be less than a fiver a week.

So, you are 19. Are you married? do you plan on having kids? When?

When I was your age I assumed I would be single and not have any kids (Ok feminism but was the tail end fo the 70s lol).

What happened that seriously affected our planning was getting maried (didn'tsee that comong) having children (3 frm age 30 incl twins- really really never say that coming) which meant anything we planned at 19 was in effect toilet paper.

So, you need to think what might chage betwwen 19 and 50 (when you will still be working but know when you will will need/want to retire).

Lots here advocate retiring at 55. WE won't be (well hubby no, me maybe) as we had kids late so need to fund university x3- (a cool 100K-150K or more for 3). Of course you can retire earlier or you cut your kids off at 18 and let them borrrow 15k+ a year but if I felt like that I wouldn't have had any at all? No point IMHO.

So you need to save for first 6 months safety in cash(from reducndancy or any other devastating things). Then/as well as a pension of some sort. Then saving outside both emergency cash/pensions. Into cash, proeprty/equity. whatever.

Saving in general, then diversification thereof is always KEY.

jamesd

BrettMorganxD wrote: »

And it came back as I am only entitled to £126 pcm that would of been a waste of 48 years worth of paying would it not?

It would not.

BrettMorganxD wrote: »

Retirement age 58. Single pension, not for spouse or partner. Not taking the lump sum cash came out at £158, taking £123.

So roughly 29 years of paying in £28 a month then getting £158 a month for roughly 30 years based on current life expectancies for males. Getting out 5.6 times what you spend. That's a good deal, not a bad one.

Adding £140 a week for state pensions at state retirement age would have you on £764 a month, about £9,176 a year before tax.

That's close to your working income but for only a small fraction of the money you're making spent to get it.

£764 is a bit low to live on for life, though I could do that with an owned property and no rent to pay. You'd probably end up needing to pay in more into say S&S ISA investments or additional pension contributions so that you could top up your income between retirement and when the state pensions start. You can worry more about this when you've done things like bought a home.

If your employer will match more than 3% going for that higher match is also likely to be a good deal.

oldvicar

£158 per month is only about £35 per week - so jamesd has got his figures wrong.

However, whilst some may say it isn't much, it is actually a very useful amount on top of a state pension and not a bad return. It would make all the difference in older age between just surviving on a state pension, and living economically but well.

jennifernil

I don't see a mistake....

£140 pw state pension is £7280 pa, plus £158pm from company pension (£1896pa) is £9176pa.

jem16

jennifernil wrote: »

I don't see a mistake....

£140 pw state pension is £7280 pa, plus £158pm from company pension (£1896pa) is £9176pa.

Jamesd corrected his post after oldvicar pointed out the mistake.