MSE News: Automatic pension enrolment - what it means for you

atush

How do you know you are saving enough? A few things.

Most say, as a guide, to put in half of your age as a % when starting pension savings. So starting at 20 would mean 10%, and starting at 30 15% etc. This figure can include your employer's contribs and tax relief.

Another way (as well as reading the projections each year) is to use a pension calculator.

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

Whatever way you do it, you should raise contribution levels along the way, and recalculate.

BerlinWall

The costs I am paying should be clearly documented as you say (I do not have a statement with me right now) but it provides information relevant to me only. If I have no information on 'market' prices how can I compare?
It is not so much as shopping around because I have to take the free money offered by my employer but they may have made the wrong decision and we both are clueless. Unless I can survey the market for options it feels like walking blindfolded.

GhIFA

BerlinWall wrote: »

The costs I am paying should be clearly documented as you say (I do not have a statement with me right now) but it provides information relevant to me only. If I have no information on 'market' prices how can I compare?
It is not so much as shopping around because I have to take the free money offered by my employer but they may have made the wrong decision and we both are clueless. Unless I can survey the market for options it feels like walking blindfolded.

Out of interest, who is the scheme provider?

The reality is that it is very difficult to know. Group Pension Schemes tend to be costed on an individual basis by providers based on information specific to the company - type of industry, profile of workforce etc. Therefore the terms offered by the provider to your employer could be different to those offered by the same provider to another company in the same industry. The terms that you would be able to obtain going to an provider will not be costed in the same "bespoke" manner.

The employer has to make a decision for the workforce as a whole - in nearly all cases, it would be very difficult to make the "wrong" decision as all of the mainstream providers will offer schemes with wide investment choice, at a realistic level of charges which will be suitable for the purpose of providing a basic, straightforward plan for receiving your own contributions and those made for you by your employer.

andyb2002

"What an awful idea. You want to take your £80 in the belief that your savings on £80 will beat the pension which is instantly turned into £220. Do you realise it would take you 21 years @ 5% p.a. for your savings account to match the pension assuming the pension never made a penny."

The above quote is total crap, yes the numbers are correct but you don't get that £220. For example using AVIVA pension calculator with the following figures:

Monthly contributions Employee £155 company £155, paying in over 6 years gets you a tax free lump sum around £5000 and a whopping £39 a month pension. How on earth is that good value or good financial planning.

We are being conned by the insurance companies with these kind of returns.

notanid10t

I am pretty good with these things but getting annoyed by the wording on my new AE pension.
Management charges I understand 1.31 in this case. Can live with that.
But Initial financial advisor charges 12 x£50 ? what is this for?

I know a few IFA are on here and I they have offered some good advice before.
It is my company that will have engaged the FA but why am I paying it and where does this get paid from? I owe over £600 before I have contributed a penny?

Confused....

stinktankcynic

notanid10t wrote: »

I am pretty good with these things but getting annoyed by the wording on my new AE pension.
Management charges I understand 1.31 in this case. Can live with that.
But Initial financial advisor charges 12 x£50 ? what is this for?

I know a few IFA are on here and I they have offered some good advice before.
It is my company that will have engaged the FA but why am I paying it and where does this get paid from? I owe over £600 before I have contributed a penny?

Confused....

If your employer choose nest, peoples pension etc, then I thought you would only pay the initial charge 1.8% on nest and 0.3% or around 0.5% per annum on your pot? If you have financial advice, I can understand being charged a fee, but if the firm just takes the contributions dictated by law then its a bit of a cheek to pay commission to anyone?

Can someone confirm that an employee being auto enrolled at the basic levels by a firm, by law, will not be paying for financial advice that they don't get?