Pension Provision - Is £220 a month enough?

Towser

DevilsAdvocate1 so much do you currently put away for your pension?

Towser

I love it when people comment

Any comments?

How much do you currently put away for your pension?

enthusiasticsaver

Just seen this thread and I put away 6% of my salary in a local government pension scheme, one of the few final salary schemes still going and my husband puts away 10% of his salary in a defined contribution but both of us have been saving since our 20s with the aim of retiring at age 60 in 4 years time. His employer matches his contribution and he has 25 years frozen benefit on a final salary scheme. To get an accurate idea of pension in retirement you need to get forecasts from your pension provider and if your company matches your contributions then best put away as much as you can afford. Do a proper budget on what outgoings you will have on retirement, do you own your own house and will it be mortgage free by then? I have done a spreadsheet every year for the last five years and updated it when we get pension statements yearly so hopefully there should be no nasty surprises. I also save in isas so on average we have managed to save around 25% of our salary for the last few years but we have no mortgage now fortunately.

atush

Enthusiastic, with no insult inteded at ALL. the amt you pay into a DB scheme isn't really relevant here (just empahsises what a great deal you have).

Your husbands is more relevant. And I would suggest, int eh run up to retirement, he whacks as much more than he can esp if his DB pension doens't pay til 65.

As well with you, if you feel you will want to retire before your DB pension pays out in full, it could make more sense to open a PP alongside so to fund 1-5 years of retirement so you dont take your DB pension early/reduced.

enthusiasticsaver

atush wrote: »

Enthusiastic, with no insult inteded at ALL. the amt you pay into a DB scheme isn't really relevant here (just empahsises what a great deal you have).

Your husbands is more relevant. And I would suggest, int eh run up to retirement, he whacks as much more than he can esp if his DB pension doens't pay til 65.

As well with you, if you feel you will want to retire before your DB pension pays out in full, it could make more sense to open a PP alongside so to fund 1-5 years of retirement so you dont take your DB pension early/reduced.

Both of us have been receiving quotes on pensions based on a retirement age of 60. My husband paid into a booster pension scheme from the age of 23 as his job involves a lot of travelling and we didn't think he would still be wanting to do that at 65 years old. There is little difference for him if he retires at 60 than his normal NRD as he reaches his maximum contribution at 60 anyway - ie 40 years. My isas have been taken to cover the gap between 60 and 65 along with a private pension from a previous company which pays out at 60. I have also bought more years in the past by paying avcs and transferred other pension schemes in.


My point is that if you get as much information on what you will receive as early as possible it helps with planning. Just paying more money into a badly performing pension scheme is not helpful. I always thinks it pays to have a range of options, whether it is isas alongside private pensions or even rental income from a property.

MoneyWorry

enthusiasticsaver wrote: »

Both of us have been receiving quotes on pensions based on a retirement age of 60. My husband paid into a booster pension scheme from the age of 23 as his job involves a lot of travelling and we didn't think he would still be wanting to do that at 65 years old. There is little difference for him if he retires at 60 than his normal NRD as he reaches his maximum contribution at 60 anyway - ie 40 years. My isas have been taken to cover the gap between 60 and 65 along with a private pension from a previous company which pays out at 60. I have also bought more years in the past by paying avcs and transferred other pension schemes in.


My point is that if you get as much information on what you will receive as early as possible it helps with planning. Just paying more money into a badly performing pension scheme is not helpful. I always thinks it pays to have a range of options, whether it is isas alongside private pensions or even rental income from a property.

That's not exactly true for everyone. This thread was looking at how much you needed to put in to get an acceptable pension in an individual's eyes. There are plenty of people out there who may be on their own or on a low salary. They may have never had the benefit of a final salary scheme or had years with no employer contributing at all. Having that information early is not going to bring them a rental property or 25% of their salary in an Isa. The help from Atush and the other helpful people on here can however maximise what they can get and I know I have benefited that way.

dunstonh

Just paying more money into a badly performing pension scheme is not helpful.

Pensions dont perform. The investments you hold within them perform. People can invest across the whole of market but even if they cant be bothered, then most basic multi-asset funds dont do badly. Will never set the world on fire but typically will be middle or the road.

I always thinks it pays to have a range of options, whether it is isas alongside private pensions or even rental income from a property.

ISAs and pensions share the same investment options. So, it is only the tax and maturity process that differs. Rental income is an option but whereas a monkey picking random properties could make money in the credit boom, that is no long the case. Plus, you typically need multiple properties to make it work and you are reliant on growth that occurred due to credit deregulation since the 1970s being repeated in the future. Property shortage is still an issue but long term it may not be and this is long term planning.

Towser

I have asked for my pension forecast from the DWP and have been pleasantly surprised I have 26 qualifying years so far.

That means by the time I retire I will easily have enough qualifying years for the full state pension unless they change it of course.

It looks as if I will be OK afterall. I will try and budget more to go to my private pension.

Towser

Is putting away 10% of your income into your pension too high? What are the average % statistics? I want to have a life as well but know I can't have my cake and eat it! I could live with average % figures though...

redbuzzard

10% is not high. It is probably well above average but if you want to retire with a similar standard of living to that when you were working, it generally won't be enough unless you started early.

That doesn't mean of course that you need to have as much income in retirement as when working. No need to save for retirement for a start! Plus state pension(s), no mortgage for those who own, no children to put through university, no costs of going to work...

It's impossible to generalise though; there's a huge range of circumstances and aspirations, as well as the relationship between your income when you are working, what age you plan to retire, and what you will need in retirement. That's why your "number" is a useful place to start.

It's worked out for me, but if I had my time again I'd try to be a bit more ahead of the game. I was made redundant at 59, and now self employed on a much lower income. I'm happy as it happens, but my point is that the government's rather blithe answer to the longevity problem of expecting everybody to work until 67 (and rising) is rather fanciful and not very safe for the individual's planning purposes.