One or Two Pension plans?

modelreject

Hi,

I have been paying into a pension with Aegon for 5 years and now the work place pensions scheme has come in I have the option to pay into our company's pension scheme.

Is it a good idea to have 2 schemes? I know that, if worst case scenario Aegon collapse I am guaranteed approx £60,000-£70,000 under law. What if had a pension pot of £120,000, I would lose half. That is where I can see having 2 schemes as a benefit. The downside is that I wouldn't be earning as much interest.

I am just firing these thoughts off the top of my head as I don;t really know much about pension schemes, or what to do in this situation.

Any help greatly appreciated.

Thanks,
MR

PS I am on a salary of £30,000 a year. I am 38 years old and been paying in for 5 years. I am curious as to what an average pension, per month would be. I understand there are many things that could affect this, but a ballpark figure would be good. Thanks again.

AnotherJoe

Most people have more than two schemes.
I think you are confusing bank collapse assurance with pension. the two are different. If Aegon collapsed all the money ought to be in an entirely separate account thats not affected at all

Only in the case of complete fraud would you be affected and even then i believe the govt would step in.

Not sure what you are saying about interest? Are you holding everything as cash?/???

Almost certainly it wil be in your interest (in the other sense) to take your companies scheme due to contribution your employer will make, and tax/NI benefits. Your company should have a document or website or similar that explains the benefits of that.

dunstonh

Is it a good idea to have 2 schemes?

Sometimes it is. Sometimes the works scheme is more expensive or limited in investment options. So, a more experienced investor may prefer to use the works scheme for the free money and their own scheme for any extra.

I know that, if worst case scenario Aegon collapse I am guaranteed approx £60,000-£70,000 under law.

Although with unit linked schemes, that really isnt an issue.

What if had a pension pot of £120,000, I would lose half.

Why would you lose half?

modelreject

@dunstonh "Why would you lose half?"

Sorry, I don;t know much about investing etc. I was assuming if I had a sum of money in the pension pot, say £120,000 and I was only covered for £60,000, that would be half.

@AnotherJoe Regarding interest, I was just referring to the pension pot increasing. I though that I would be earning interest on my investment and that is what helps the pot grow. Again, I am a bit of a newb :-)

I used a few online pension calculators and to get a decent pension of say £20,000 a year I would need a pension pot of at least £330,000. Now I just have to figure out how best to achieve this.

mark5

No expert but I would say at 33 you were a little late starting your pension so would probably need to pay in a little more to catch up.

For me if your earning 30,000 And starting a little late you need to be putting a good 400 per month in, which only costs you 320 with tax relief.

In regards other people's situations I'm 35 soon to be 36, my fund is about 40k today but the value is all over the place at the moment, I have just changed my contribution to 400 per month, earn roughly 28,000 but this varies.

I also have an Isa which I see as retirement funds aswell but don't want to commit this money long term yet.

mark5

modelreject wrote: »

@dunstonh "Why would you lose half?"

Sorry, I don;t know much about investing etc. I was assuming if I had a sum of money in the pension pot, say £120,000 and I was only covered for £60,000, that would be half.

@AnotherJoe Regarding interest, I was just referring to the pension pot increasing. I though that I would be earning interest on my investment and that is what helps the pot grow. Again, I am a bit of a newb :-)

I used a few online pension calculators and to get a decent pension of say £20,000 a year I would need a pension pot of at least £330,000. Now I just have to figure out how best to achieve this.

Is the state pension included in those figures?

dunstonh

@dunstonh "Why would you lose half?"

Sorry, I don;t know much about investing etc. I was assuming if I had a sum of money in the pension pot, say £120,000 and I was only covered for £60,000, that would be half.

Unit linked funds are ringfenced from the adminstrator and if the administrator for the pension failed, this does not mean you will lose your pension. They cant spend that money in your pot. It is invested into assets which have a value. Those assets will still have the same value if the administrator fails. Its only really in areas of fraud where the protections can come into play.

If you go back to the old with profit fund days, then the protection would have been linked closely to the fund than today.

modelreject

@mark5 "Is the state pension included in those figures?" From what I saw when using this particular calculator, no it doesn't include state pension.

I know I'm late starting. Wasn't something I though about or was advised about really. Willing to make up for it now...wages permitting ;-)

mark5

modelreject wrote: »

@mark5 "Is the state pension included in those figures?" From what I saw when using this particular calculator, no it doesn't include state pension.

I know I'm late starting. Wasn't something I though about or was advised about really. Willing to make up for it now...wages permitting ;-)

20k seems high for 330k pot.

modelreject

The calculators vary. I will have to have a chat to a financial advisor I think :-) Tried another calculator and it states £500,000!!!

modelreject

Wondering if you could help with a few pension terms?

Estimated pension each year (£)
Estimated reduced pension each year (£)
Assumed investment return of Low each year
Assumed investment return of High each year

Thanks,
MR