Am I in the Pension Danger Zone?

pennypincher3562

Hi There

I decided to have a look at my pension contract the other night, and even though I don't understand most of the jargon, I'm not sure I like the look of it.

In a nutshell:

- It's a 'contracted out' pension
- I believe that it was initially contributed to by an employer who I left 10 years ago, now I contribute £38.46 a month to it
- Current transfer value is £24,137
- I have approximately 27 years before I'm eligible for a state pension
- I think I would struggle to continue my current employment for another 27 years

My gut feeling is that things don't look too healthy. I'd really appreciate if someone could advise me on the next steps to take in order to sort things out. I've read various articles, but the jargon can make it tough to understand things.

Thanks
PennyPincher3562

gadgetmind

Have you tried playing with a pensions calculator?

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

Bear in mind that you'll also get state pension but obviously need to be able to tide yourself over if you're wanting to retire early.

My gut reaction is that neither your current pot nor current contributions will let you do that. Even when starting young, 15% of salary is a bare minimum to be saving.

atush

you need to contribute more.

what does your current employer do about pensions? They need to start contributing into one for you, if not this year- very soon. Ask them.

pennypincher3562

Hi

Thanks for the great responses. The calculator was very useful for trying to visualise future scenarios. With my approximate retirement year being 2038, it looks like I'll be living off approx £110 to £160 a week (with current setup.)

I will email my employer, and see if they can contribute.

How do you work out what amount of money would provide you with a basic level of comfort in 2038? There are so many factors involved, inflation, energy costs, social issues etc....

Even though my pension may be a mess, thankfully I've paid of most of my mortgage.

Cheers
PennyPincher3562

Lokolo

The calculator above takes into consideration inflation and possible growth. You can play around with this in the tool in "Advanced Options"

(for example, change from Todays Terms to Money Terms and you will see the difference in £)

gadgetmind

pennypincher3562 wrote: »

With my approximate retirement year being 2038, it looks like I'll be living off approx £110 to £160 a week (with current setup.)

Don't forget state pension. As you should have the full 35 years, figure this in at £144 in today's money.

How do you work out what amount of money would provide you with a basic level of comfort in 2038? There are so many factors involved, inflation, energy costs, social issues etc....

As Lokolo says, the calculator works in today's money, which is by far the best way to do things.

bigfreddiel

pennypincher3562 wrote: »

- I think I would struggle to continue my current employment for another 27 years

27 years ago I thought the same about my job, but I've stuck to it and in a few months I retire - it goes quick enough so stick to it.

fj

Jack_Griffin

Inflation can go up and down, the Bank of England has a historical inflation calculator that is good for seeing how inflation varied over different time periods.

http://www.bankofengland.co.uk/education/Pages/inflation/calculator/flash/default.aspx


Lets look at two different 15 year periods
- £1000 in 1975 inflates to £3690 in 1990 - average inflation 9% per year
- £1000 from 1995 inflates to £1499 in to 2010 - average inflation 2.7% per year

So you see over such a long period as 30 years, inflation rates can have a massive variation & really no one has a crystal ball to predict what will happen.. I llived through the 70's when inflation in this country went through the roof, it hit 24% in 1975, no guarantee it won't happen again!