Is My Pension Any Good?

hugonellie

I have a work group pension (Standard Life Managed Pension Fund) which was arranged Dec 2005. At the time I was earning around 15k and putting in 3% and work have been matching that - they won't go above 3%. I now earn 30k and work still match my 3% - I'm concerned I should be putting more than this away but I'm not sure if I need to change where my funds are going as I think when I took out the plan I wasn't prepared to take as many risks - and I now realise I had that the wrong way around. As it stands my pension is only £36,601 which is broken down as follows:

Investment Growth - £13,649
Tax Relief - £2,873
Employer Payments - £8,838
My Payments - £11,240 (I believe at one point I upped my payments)

I have just signed up to the new government Nest plan with my work - and I'm overpaying on my mortgage - I have 49k left on a house value of 100k. At my current rate of payments I should have this paid off in 7 years and I have no plans to move in that period.

What should I be upping my payments too? and should I be on another riskier fund or should I stick where I am? I don't know if that growth is high / low or normal? I'm usually really good with my money but for some reason I've just ignored my pension and obviously want to start taking more interest...

Any help appreciated :beer:

kidmugsy

Do you contribute to the pension by Salary Sacrifice (sometimes called "Smart" Pension)?

hugonellie

Not that I know of, I've certainly never heard that word, just standard 3% off my wages at source. The only time we discussed pensions was when I signed up 12 years ago - there's no one here to actually talk to about it, and our accountants say its nothing to do with them and I have to speak to Standard Life direct. Apparently any change to my pension will take 30 working days, so I want to make sure I change both the payment and funds (if needed) at the same time!

edit to add: I've just read a lil on salary sacrifice, it looks like both myself and the company could save money if I gave up some of my wage for extra pension contributions - is that correct? So rather than upping my %age with standard life I may be better going that way? I think they would be open to this if so as they do childcare vouchers / company cars etc

dunstonh

I have just signed up to the new government Nest plan with my work

Nest is a product provider and not the Govt.

Apparently any change to my pension will take 30 working days, so I want to make sure I change both the payment and funds (if needed) at the same time!

That is not correct. Switches are done using the unit price of the next pricing point after the instruction is received. Transfers out are done within days.

What should I be upping my payments too?

Whatever you need to hit your target in retirement. You are certainly paying a low amount and your pot so far is about where a 35 year old should be if you are talking average wage earner looking to retire at 68.

and should I be on another riskier fund or should I stick where I am?

You havent told us where you are. You should invest in funds appropriate to your risk level, knowledge and behaviour and your capacity for loss. Not anyone else's.

hugonellie

dunstonh wrote: »

That is not correct. Switches are done using the unit price of the next pricing point after the instruction is received. Transfers out are done within days.

You havent told us where you are. You should invest in funds appropriate to your risk level, knowledge and behaviour and your capacity for loss. Not anyone else's.

Thanks for this.....

Standard Life told my director about the 30 days rule - I asked for them to up my payments to 5% around 3/4 weeks ago, and they didn't change on this months pay

With regards to the last comment, I'm with Standard Life Managed Fund . I only ever remember telling the guy (12 years ago when I had no idea what a pension really was!) that my attitude to risk was small - super conservative. From what I've read now, I should of had a higher risk fund in my younger years? I have no idea if that's what kind of fund they have put them in - if the growth rate is normal or average and I literally have no one here to talk to about it. I know I am happier to take on more risk these days and I can afford to pay more into it - I just don't know what that number should be.

Should I be finding an advisor to talk to me about this privately out side of work?

dunstonh

Standard Life told my director about the 30 days rule - I asked for them to up my payments to 5% around 3/4 weeks ago, and they didn't change on this months pay

Ahh, increases have to be in before a certain time. This is because they are submitted quite a bit before the actual payment date. So, that bit may well be the case.

With regards to the last comment, I'm with Standard Life Managed Fund . I only ever remember telling the guy (12 years ago when I had no idea what a pension really was!) that my attitude to risk was small - super conservative. From what I've read now, I should of had a higher risk fund in my younger years?

Couple of things.

1 - you should have a fund that is appropriate to your risk profile. Even if it is lower risk than desirable. Ignoring behaviour and capacity for loss, you should be higher risk if you have a long time. However, when you factor in behaviour, knowledge and capacity for loss, that could bring it down.

2 - The Managed fund is more medium risk. It was the default fund. So, they didnt take much notice of your description of risk. It is the default fund because it is middle of the road.

hugonellie

Work never take notice full stop so that doesn't surprise me

I'll ask work about salary sacrifice and if they are open to changing that and look at what I can maybe afford to bump my payments up too. I'm currently paying £250 a month off a 0% interest free card, but that's due to be paid off in three months time, so I could divert some funds from that into it and not need to change my lifestyle. I would just like to have some form of plan when that 3 months is up, so I don't get used to having the extra money to blow!

jamesperrett

Given that you are only paying just over 1% on your mortgage, it might be worth thinking about directing your overpayments to your pension where they are likely to earn more than that. While I can understand the temptation to be debt free as soon as possible, the currently low mortage rates mean that you can often use the money more productively elsewhere.

hugonellie

I love the idea of being mortgage free and having another £650 a month in my pocket to play with - especially if I can continue with my current plan and have it paid off in the 7 years, I'd be 42/43 at that point - providing nothing goes wrong with work etc

That said I'm hoping to be able to do both tbh - I know I can comfortably afford to pay in a lil more to my pension when that CC debt is cleared later on in the year

davieg11

I was in The Standard Life Managed Pension Fund for 8 years. The volatility rating is 4 ( from 1 to 7) which is medium risk. I have changed mine to SL Baillie Gifford Life Managed Pension Fund and SL International Equity Pension Fund which are volatility rating of 5. I've also added a little to Schroder US Mid Cap which is high risk. You would have to look at funds and decide how much risk you can cope with as some high risk funds can drop as much as 80%!