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Pension advice - public to private sector

Hi,

I have a final salary pension of approx £5,400 pa index linked accumulated from my public sector job and I am moving to the private sector onto a contributory scheme next month. I am 31 and I think I need a income of approx £25,000 pa in my retirement at say 65.

I know the advice would usually be to divide your age by two to get to your recommended total contributions pa, say 15% for me but given the above pension already accommulated, how much do people think I should put aside going forward to achieve my goals?

Complicated one, any input greatly appreciated!

Comments

  • JoeCrystal
    JoeCrystal Posts: 3,250 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    You need to work backward. Here is a link to a pension calculator to get a very rough idea.

    So you want enough fund value for £20,000 per year over next 34 years, a quick look on it suggest £625 per month. Better start saving!

    Cheers,
    Joe
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    Ash1982 wrote: »
    Hi,

    I have a final salary pension of approx £5,400 pa index linked accumulated from my public sector job and I am moving to the private sector onto a contributory scheme next month. I am 31 and I think I need a income of approx £25,000 pa in my retirement at say 65.

    I know the advice would usually be to divide your age by two to get to your recommended total contributions pa, say 15% for me but given the above pension already accommulated, how much do people think I should put aside going forward to achieve my goals?

    Complicated one, any input greatly appreciated!

    That's a rule of thumb in terms of age but insufficient to achieve anything equivalent to a defined benefit pension. You're still relatively young so contributions would be lower than if you were older, but you're still looking at total contributions, including employer and tax relief as well as your money, of around 25% of gross salary.
  • JoeCrystal wrote: »
    You need to work backward. Here is a link to a pension calculator to get a very rough idea.

    So you want enough fund value for £20,000 per year over next 34 years, a quick look on it suggest £625 per month. Better start saving!

    Cheers,
    Joe

    Only assuming he doesn't take into account the state pension. If this provides even a modest £5k a year of his £20k then that £625 per month falls to £460.
    Thinking critically since 1996....
  • bigadaj
    bigadaj Posts: 11,531 Forumite
    Ninth Anniversary 10,000 Posts Name Dropper
    Only assuming he doesn't take into account the state pension. If this provides even a modest £5k a year of his £20k then that £625 per month falls to £460.

    True but state pension age will be over 70 by the time the OP retires.
  • JoeCrystal
    JoeCrystal Posts: 3,250 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    bigadaj wrote: »
    True but state pension age will be over 70 by the time the OP retires.

    I agreed and to be honest, one should now no longer consider state pension if you are young. Any extra is a bonus.

    Cheers,
    Joe
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    But you should also assume there will be savings outside a pension such as cash and S&S isas. Any good retirement plan would have these, esp to boost income Before any SP arrives.
  • Ash1982
    Ash1982 Posts: 189 Forumite
    Thanks for the advice. Makes you really appreciate the public sector pension scheme!

    What would a decent contributory pension scheme for an employee of a large pharmaceutical company look like?

    Along the lines of employee contrbution at 5% with company matching at 5% or should I expect more? I've read one thread on here were someone is contributing 4% with their employer adding 10%.

    Thoughts appreciated.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    I don't know as I haven[t worked ino one.

    But, to replace a Public service pension, 25-30% of salary would need putting in your pension (assuming you want death benefit, indexing, and spousal pension).

    So, if your new job, with pension minus your current contribs, isn't 25% above above your current pay, think carefully. Not to say you should not do ti, esp if future prospects are good. you ouwld just need to save extra outside your pension alongside.
  • mark55man
    mark55man Posts: 8,141 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Just personal experience (I am not an advisor).

    Double matching your contribution is unusual (but not rare). Single matching is pretty common. Any more than double is fab!

    Salary sacrifice is also often offered - sometimes the company give you the advantage of the NI savings sometimes they keep them.
    I think I saw you in an ice cream parlour
    Drinking milk shakes, cold and long
    Smiling and waving and looking so fine
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