Am I putting enough into my pension pot?

eastcorkram

atush wrote: »

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.

Yeah thanks for that If you think that I will not be able to retire, then I'm not sure that those contributions from the employer over 10 or 11 years are going to change the situation into one where I can retire!

Re your last sentence, that is what I'll probably do. If I pay say £500 pounds a month into a PP, I guess that would be better than paying the same amount into an ISA.

eastcorkram

kidmugsy wrote: »

Fair point, but you mustn't assume that eastcorkram actually wants rational advice. He just wants someone to tell him that a blinkered, curmudgeonly, ill informed, cut-off-your-nose-to-spite-your-face- attitude is fine and dandy.

I don't recall asking for advice but as I'm here, I may as well.
54, no pension provision, have had to shall we say 'start again' a couple of times over the past 10 years or so. Mortgage will be paid off in about five years time. So what to do now with about £500 per month that I can afford to save?

bigadaj

eastcorkram wrote: »

I don't recall asking for advice but as I'm here, I may as well.
54, no pension provision, have had to shall we say 'start again' a couple of times over the past 10 years or so. Mortgage will be paid off in about five years time. So what to do now with about £500 per month that I can afford to save?

How much do you earn and what other debts do you have?

Order should be paying down high interest debt, then saving into an emergency fund, typically £5-10k for many.

Sounds like you are overpaying your mortgage, dependent on the rate this might not be the best way to do things. Might be better to divert this into equities either through pensions or through an isa.

If you don't pay higher rate tax and get no contributions then it's generally better to save with isas rather than a pension, though having both is preferable if possible.

eastcorkram

bigadaj wrote: »

How much do you earn and what other debts do you have?

Order should be paying down high interest debt, then saving into an emergency fund, typically £5-10k for many.

Sounds like you are overpaying your mortgage, dependent on the rate this might not be the best way to do things. Might be better to divert this into equities either through pensions or through an isa.

If you don't pay higher rate tax and get no contributions then it's generally better to save with isas rather than a pension, though having both is preferable if possible.

Thanks. Earnings are around £2000 per month nett. No other debts. I'm not over paying on the mortgage. Have an emergency fund of just over £2k (personally have always found this enough). Out of interest, why do you think it would be better to use the ISA? If I put £100 into the ISA, then I have £100 earning x amount of interest. I thought that if I put £100 into a pension, then straight away it grows due to the tax relief, and then this larger figure (£120) would be earning interest. That seems to be what I figured after a short time reading this site.

bigadaj

eastcorkram wrote: »

Thanks. Earnings are around £2000 per month nett. No other debts. I'm not over paying on the mortgage. Have an emergency fund of just over £2k (personally have always found this enough). Out of interest, why do you think it would be better to use the ISA? If I put £100 into the ISA, then I have £100 earning x amount of interest. I thought that if I put £100 into a pension, then straight away it grows due to the tax relief, and then this larger figure (£120) would be earning interest. That seems to be what I figured after a short time reading this site.

People have different views on that. One school of thought is that putting into a pension isn't any better than an isa, as in a pension you get tax relief on the way in, but with isas you pay no tax on any interst or dividends. Isas are more flexible in that you can get at the capital which you don't with a pension, though that accessibility can also be a problem if you are not disciplined.

Pensions are also locked away, though you could access them in anything more than a year, and pension savings aren't means tested for benefits whereas isas would be.

atush

eastcorkram wrote: »

Yeah thanks for that If you think that I will not be able to retire, then I'm not sure that those contributions from the employer over 10 or 11 years are going to change the situation into one where I can retire!

Re your last sentence, that is what I'll probably do. If I pay say £500 pounds a month into a PP, I guess that would be better than paying the same amount into an ISA.

Still not getting it are you?

How much of your annual salary is 3%? if you get paid 20K say, in 12 years the money you would have thrown away will be in excess of 7K. Add in investment growth and you are flushing away over 10K. How stupid is that?

I think you won't be able to retire, as you aren't saving and are insistent on throwing away money.

atush

eastcorkram wrote: »

I don't recall asking for advice but as I'm here, I may as well.
54, no pension provision, have had to shall we say 'start again' a couple of times over the past 10 years or so. Mortgage will be paid off in about five years time. So what to do now with about £500 per month that I can afford to save?

You asked for advice by coming here?

atush

eastcorkram wrote: »

Thanks. Earnings are around £2000 per month nett. No other debts. I'm not over paying on the mortgage. Have an emergency fund of just over £2k (personally have always found this enough). Out of interest, why do you think it would be better to use the ISA? If I put £100 into the ISA, then I have £100 earning x amount of interest. I thought that if I put £100 into a pension, then straight away it grows due to the tax relief, and then this larger figure (£120) would be earning interest. That seems to be what I figured after a short time reading this site.

So what is your gross per month? 2400? that means not taking up a pension contrib of 3% is throwing away 864 per year.

Assuming (unlikely) your salary does not go up you have thrown away over 10K in 12 years. More likely 15 w/increases. Add in investment growth (on just that and not your own 3% matching contribs?) we are talking you are throwing away over 20 k most likely more.

hugheskevi

Picking up on various points raised by a range of contributors:

I think there will be a lot more part time working and people not retiring until they can either afford it or until they die.

I expect there will also be a lot of people who work until they can no longer do so due to ill-health. Particularly those with manual jobs. Early retirement will increasingly become related to disability/ill-health, especially for those on average and below earning levels. That is a concern for those leaving retirement planning late, as many may find plans dependent on working to age 70 are interrupted several years before then with no way of making good the gap other than reducing living quality to levels well below what may have been expected.

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!

Not related specifically to the comment above, but I think a lot of people fail to appreciate the significance of a few extra pounds per week. When living on the minimum level of around £150 p/w an extra £30 per month is a 5% increase in living standards. Yet many still have seem to think that if they are going to be poor, they may as well live at the minimum and fail to consider just what a difference even small efforts will make, even if some is means-tested away.

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

There is an implicit assumption there that the system will remain the same for the next 30 or so years. Gambling future living standards on fickle government policy which can and does change frequently is a brave choice.

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

I hear this claim asserted frequently, including several times in this thread by various posters, but disagree with it. Pension Credit will be significantly scaled back (though not phased out - not everyone will receive a full single-tier pension) but not the other means-tested benefits. Those who do not own their own home at retirement (which may well be a reasonable proportion in the future giving the change in ownership patterns) will still face means-testing issues around pension saving.

In evidence submitted to the Work and Pensions Select Committee regarding single-tier, the Pension Policy Institute said:

However, even with the level of the proposed single-tier pension above the Guarantee Credit level, relatively high levels of means testing could remain in the future...Eligibility for Housing Benefit (HB) and Council Tax Benefit (CTB) will still extend to incomes much higher than the single-tier pension level. Although this is arguably a different type of means-testing than Pension Credit (HB and CTB are to meet specific housing costs rather than for basic income) they can still result in a reduction in the value of private pension saving to individuals. PPI estimates based on the Green Paper proposals suggest that in 2050 up to a third of pensioners might still be eligible for at least one of Pension Credit, HB or CTB.

How on earth could anyone know "the actual figure"? [of fraudulent disability claims]

Each year DWP scrutinise a sample of cases to identify rates of fraud and error. As with all samples there is uncertainty, but it is a rigorous exercise under National Statistics. A quick look at the headline figures show a rate of fraud across all benefits of 0.7%.

One school of thought is that putting into a pension isn't any better than an isa, as in a pension you get tax relief on the way in, but with isas you pay no tax on any interst or dividends. Isas are more flexible in that you can get at the capital which you don't with a pension, though that accessibility can also be a problem if you are not disciplined

I think too much emphasis is put on either/or when it comes to pensions and ISAs.

Subject to a few wrinkles about means-tested benefit entitlement, saving discipline and annual pension saving limits/tax thresholds/earnings, there are few reasons why money can't be saved into an ISA and later moved into a pension, thereby gaining the flexibility of an ISA as well as the tax benefits of a pension. For basic rate taxpayers who will in future be higher/additional rate taxpayers it will not only give more flexibility but also a superior final outcome.

eastcorkram

atush wrote: »

Still not getting it are you?

How much of your annual salary is 3%? if you get paid 20K say, in 12 years the money you would have thrown away will be in excess of 7K. Add in investment growth and you are flushing away over 10K. How stupid is that?

I think you won't be able to retire, as you aren't saving and are insistent on throwing away money.

:rotfl: So you think that if I had 10k, then I would be able to retire. How long do you think that is going to last? I assure you I will retire (assuming I'm still around of course!). You say I am not saving. Not sure where you get that from. I've always had savings, and I am saving now. I've never paid into a pension though, as I've never worked anywhere that had a scheme, and never got around to setting up a PP. I'm not throwing away money. Believe me, I've never been one to throw away money. For what you say to happen, is making quite a few assumptions.
Thanks for the input though! :T