On Track??

tony4147

I'm 50 Y/O, looking to retire at 65.
I have a frozen pension (with profits) with a total value of £80K
A DC pension with a value of £45K, a contribution total of £700 / month goes into this pension.
I increase my contributions every year about 6-7%.

I would like to have a pension after a 25% lump sum of £18-20K/yr (in todays money) with the state pension on top, and growth inline with inflation.
I've tried many calculators and ended up with various figures.

Question, am I or not on track or thereabouts?

somethingcorporate

No - I don't think so. Looking at the HL pension calculator it says you are quite a way off once you take the full lump sum - looking at around £13-14k depending on how much you increase your contribution. Given you are approaching retirement your risk profile should significantly decrease to risk variability hitting your capital value (in lifestyle profiling this is over the last 5-10 years or so) so I am not sure what growth assumptions are used in this figure but they may also be over-optimistic.

ukjoel

Think your basing your estimates on top end figures for growth, and annuities. Not saying its not possible, but requires a lot of things to happen in your favor at just the right times.

Agree SC below that something closer to 15k, rather than the 20k is where I would be estimating.

tony4147

Thanks for your help, so I'm guessing that I need to up my contribution to a total of £1000 / month, to get somewhere in the ballpark.

ukjoel

Yes - You may find annuity rates rise over the next 15 years as rates increase and life expectancy figures seemed to have leveled out.

Things change all the time. In 15 years they may not allow the 25% tax free payout so you may wish you had put the money into ISA's so you had the lump sum there instead for purposes of flexibility.

peterg1965

ukjoel wrote: »

Yes - You may find annuity rates rise over the next 15 years as rates increase and life expectancy figures seemed to have leveled out.

Things change all the time. In 15 years they may not allow the 25% tax free payout so you may wish you had put the money into ISA's so you had the lump sum there instead for purposes of flexibility.

There is always the risk of the government of the day revisiting pension rules and the 25% tax free lump sum is always speculated to be something that a government could get rid off. The tax free lump sum is one of the main attractions of a pension, along with tax relief.

However, in my view that would be political suicide and would probably result in some unintended consequences like confidence in pensions as a method of retirement savings going down the pan. Just my view of course.

gadgetmind

peterg1965 wrote: »

confidence in pensions as a method of retirement savings going down the pan.

It pretty much already has due to all of the meddling over the last few years.

peterg1965

gadgetmind wrote: »

It pretty much already has due to all of the meddling over the last few years.

Tell me about it! My plans (pensions, retirement, paying off the mortgage) are in slight disarray following the changes over the last 3 years, LTA and Annual Allowance restrictions have significantly moved the goalposts for me and I ceased paying into my SIPP last April.

gadgetmind

Yup, just as soon as I get new plans in place, another slurry of knee-jerk regulations washes them away.

Some of the changes have come in with close to zero notice only for everything to change again a few months later.