Am I putting enough into my pension pot?

bigadaj

eastcorkram wrote: »

Very true. But think I am already too old. Will be 55 this year. Have not been given the forms for this new scheme yet, but when I get them, I will be opting out.

So what are you going to live on in retirement, the other option is of course to carry on working til you drop dead.

Your employer would love you opting out, you've effectively given up a 3% pay rise, your choice I suppose.

eastcorkram

bigadaj wrote: »

So what are you going to live on in retirement, the other option is of course to carry on working til you drop dead.

Your employer would love you opting out, you've effectively given up a 3% pay rise, your choice I suppose.

Apologies to the OP, as it feels like the thread is being hijacked, but as you ask the question.
I guess I will be living off the state pension, plus whatever I will have in savings by then. I'm not sure that there is much point in joining the company scheme. It would probably end up paying me a pension of a pound a month! And that assumes that I stay in the same job between now and retirement. If I were a lot younger then yes, I'd do it. I've thought maybe I should start a personal pension, but I've read things on here, for and against that!

On the plus side........I've a very simple lifestyle already, and no one in my family ever seems to have survived very long after retirement anyway. So I won't have to endure if for more than two or three years.:laugh:

Southend1

bigadaj wrote: »

So what are you going to live on in retirement, the other option is of course to carry on working til you drop dead.

Your employer would love you opting out, you've effectively given up a 3% pay rise, your choice I suppose.

Would Eastcorkram lose more in means tested benefits than he gains in private pension though?

Mr_F_Dorsetty

I used to sell pension but I won't give any advice.

But I will give you some general facts:

* I've never met anyone who has put in enough in reality to a defined contribution scheme. Most start way too late to get anywhere near a decent payout anyway.

* Every time I saw someone on pension business they would go white when I told them how much they needed to put in for a possible decent 2/3rds outcome

* Always adjudge the likely outcome of your pension savings by the lowest figure of possible growth figures proffered. Then knock some more off and you might just be getting close to reality.

* Always have an 'auto riser' on your pension payments, so they go up year by year obviously. Mostly when young you have better things to do than spend all your time worrying about 50yrs hence... or you should have better things to do imo!

* If someone is employed PAYE it is one of the few occasions that I would say that a PPI on the pension was a good idea. The way pension monies are so drastically effected over relatively short periods of time means if you're ill for a year you still want the credits into you pot. A crediting PPI scheme is the only way to do this, as you obviously cannot put in money you have not earnt.

* If you pay in the maximum allowable by the HMRC so that you can't pay anymore; That's the one time you can say you are doing your best.

* Defined Contribution Pensions are a pretty nasty lottery all told, you simply have no idea what'll be happening to the annuity rates when you cash out.

So in light of that the advice I always gave people was, "Think on before ramming all your eggs into that one basket"

bigadaj

Southend1 wrote: »

Would Eastcorkram lose more in means tested benefits than he gains in private pension though?

Possible but remember such benefits are being drastically reduced and phased out with flat rate pension coming in soon.

bigadaj

Mr_F_Dorsetty wrote: »

I used to sell pension but I won't give any advice.

But I will give you some general facts:

* I've never met anyone who has put in enough in reality to a defined contribution scheme. Most start way too late to get anywhere near a decent payout anyway.

* Every time I saw someone on pension business they would go white when I told them how much they needed to put in for a possible decent 2/3rds outcome

* Always adjudge the likely outcome of your pension savings by the lowest figure of possible growth figures proffered. Then knock some more off and you might just be getting close to reality.

* Always have an 'auto riser' on your pension payments, so they go up year by year obviously. Mostly when young you have better things to do than spend all your time worrying about 50yrs hence... or you should have better things to do imo!

* If someone is employed PAYE it is one of the few occasions that I would say that a PPI on the pension was a good idea. The way pension monies are so drastically effected over relatively short periods of time means if you're ill for a year you still want the credits into you pot. A crediting PPI scheme is the only way to do this, as you obviously cannot put in money you have not earnt.

* If you pay in the maximum allowable by the HMRC so that you can't pay anymore; That's the one time you can say you are doing your best.

* Defined Contribution Pensions are a pretty nasty lottery all told, you simply have no idea what'll be happening to the annuity rates when you cash out.

So in light of that the advice I always gave people was, "Think on before ramming all your eggs into that one basket"

The key is diversity and spreading risk, life isn't mapped out for most people and things will change drastically whether it's house purchase, marriage, kids, redundancy, unemployment etc

Available money should generally be split between different pots including paying down debt, overpaying mortgage, cash savings, cash and shares isas as well as pensions.

People obviously don't have to buy an annuity anymore, drawdown is attractive for many as the payout is often not much less than an annuity whilst retaining capital, though obviously with some investment risk.

I'd personally put the ppi premiums into the investment and self insure, can't see this being economic for most people.

Daniel54

Mr_F_Dorsetty wrote: »

* .

* Defined Contribution Pensions are a pretty nasty lottery all told, you simply have no idea what'll be happening to the annuity rates when you cash out.

"

There is no requirement now to buy an annuity

I don't see anything nasty about building up a tax sheltered retirement fund from which 25% can be taken as a tax free lump sum

kidmugsy

Daniel54 wrote: »

I don't see anything nasty about building up a tax sheltered retirement fund from which 25% can be taken as a tax free lump sum

75% has the tax deferred rather than avoided. For someone without an employer contribution it's a gamble that the tax rate you avoid on your contributions is higher than the tax rate you pay on your annuity/withdrawals. As it happens I've won that gamble in that the basic rate of income tax has fallen since I first contributed to a Retirement Annuity Plan. I wouldn't be surprised to see it go back up in future. Would you?

Daniel54

kidmugsy wrote: »

75% has the tax deferred rather than avoided. For someone without an employer contribution it's a gamble that the tax rate you avoid on your contributions is higher than the tax rate you pay on your annuity/withdrawals. As it happens I've won that gamble in that the basic rate of income tax has fallen since I first contributed to a Retirement Annuity Plan. I wouldn't be surprised to see it go back up in future. Would you?

Point taken and agreed with -without employer's contributions it is the 25% tax free which makes the difference,and for many the flexibility of building up savings in an ISA might offset that.
From memory,when I started working the mid 70's the basic rate of tax I was paying was over 30% ,and that was on £2,200 a year.Hopefully we won't go back there but I wouldn't bet on there being some increase.
I read an interesting article by Hamish McCrae recently pointing out that there is an unhealthy instability in an income tax system that relies on approximately 350,000 taxpayers for nearly 30% of it's total take

atush

eastcorkram wrote: »

Very true. But think I am already too old. Will be 55 this year. Have not been given the forms for this new scheme yet, but when I get them, I will be opting out.

increadibly stupid to throw away 1-3% of your salary. Opt in.

Then save elsewhere for your retirment, or you wont be able to retire. Consider PPs and S&S isas.