ex employer pension

madlyn

I currently pay into a private pension with AEGON, my current employers pension 3% a month and I also have a pension from my previous empolyer that I have not payed into since I left in April of last year.
Is it worth me starting to pay into this again? I can afford to pay in around £20 a month which I know is not enough but is what I can afford.
And I am 43

MallyGirl

you need to look at what the 2 pensions are invested in before you can judge that.
Does your current employer do salary sacrifice - if so then it would be better to invest more with that one. Are you contributing enough to get the max contribution from your employer (free money)?

madlyn

My current employers pension is through salary sacrifice, so I would be better perhaps increasing from 3% to 4% that way my employer matches that and it comes straight out of my wages which I wont notice?

MallyGirl

and you don't pay NI on the amount sacrificed so that is another 12% of the amount as a boost.

Does your employer have an upper limit on what they will match?

madlyn

The limit I can pay is 6% and the most my employer will pay is 5%

tacpot12

You really need to pay the most you can into your employer's scheme. Even with their contribution, you are still only paying in 11% of your salary into your pension. On the face of it, as you currently live on 97% of your salary, if you save at the rate of 11% per year, you will need to save for 8 years to have one year's income in retirement! Luckily this is not correct, because usually by the time you retire you don't need anything like your current salary to live on. Depending on circumstances, you might need 50-65% of your current salary, so you only need to save for 5.5 years per year of retirement. Doubling the amount you save, will halve the amount of time you have to work to have one year in retirement. The performance of your investments will also have a big impact, and will reduce the number of years you need to work down by a good amount. The State Pension also has a very big impact on this, so don't worry too much. I was just trying to demonstrate that 11% is not a lot in pension savings. I had a generous employer and I used to contribute 13.5% that they 'matched' with 10%, so I was paying 23.5% of my salary into my pension each year.

Please take a moment to review your outgoings to see if there is anyway that you can pay more than 5% (before tax) into your pension. If you can, you might need to setup a personal pension for the excess that your employer will not let you contribute via their payroll, or have a look at you old employers penson to see if has low charges, good investment performance and will allow you to restart payments (as an old employer's scheme it may not allow you to add any more money). If so, you need to find out how much is in that scheme, and compare the charges and performance with any new scheme to see if it is worth transering the money in this old scheme to a new pension.

MallyGirl

In that case I would try and make sure that I was contributing enough to get the employer 5%. (as a bare min).

madlyn

In my old employers pension I have around 6.5k and in the last year they charged me around £2.50

MallyGirl

what you need to do is see what each is invested in - the old one might be similar to the new one or completely different. Only then can you decide what to do - or not do - with the old one.
You might be able to transfer the old one into the new one - makes for a simple life but the new provider may not let you.
Or you just leave it where it is and collect the £250 per year that it might generate once you reach the retirement age for it.

madlyn

The old one is ran by Legal & General for M&S and if I remember correctly once you had been paying into your pension for 3 years, if you ever left you were unable to transfer to another pension. I left after 4 years.

xylophone

Have you enquired about a transfer in to your new pension?