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planning for retirement in 25 years time

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planning for retirement in 25 years time

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jamie_k_2jamie_k_2 Forumite
18 posts
Good evening all.

It has been a while since I have used these forums. I am just after some help and advice as a complete newbie to pensions and retirement planning. Basically to cut a long story short I/we (me & my partner) have had our head buried in the sand, and with 3 young kids, have built up quite a bit of debt, which we are now tackling, and at the same time we will be looking to buy our first home. I realise now that I need to also starting thinking and to start planning for retirement as well sooner rather than later.

I am a higher rate taxpayer and once all sorted with the debts and then buying the house I will have about 25 years until standard retirement age for my company pension. Company pension is DB. I have also been paying i little extra into AVCs for the company pension, which just simply builds a side pot of money. Unfortunately the company do not match the AVCs. With the AVCs however, I save 40% tax at source, but this AVC pot also counts as my 25% tax-free lump sum of the pension upon retirement. This lump sum would be used to pay the mortgage off if any left. I have had about 38% gains from my total contributions to the AVC pot over the previous 6 years, I am not sure if this is any good? I am in what it known as the 'lifestyle fund' I believe which is supposed to be higher risk, although there is a limited choice of funds available for investment in for the AVCs.

I am looking to fund an additional retirement income of approx 5-10k per yr to supplement the company pension, and to have a lump sum to ensure the mortgage is paid off on retirement, and not sure what road to be going down. I would be looking to put approx 400-500 extra in (in todays money).

Not sure whether to put a bit more into the AVCs (I am currently putting about 60 per month in), or would it be better value for me to switch to something else?. If there is any money left after paying off the mortgage from the lump sum, or mortgage is already paid off by then is there anything that could be done with the lump sum to invest it to boost retirement income, upon retirement?
Then beyond that I am not sure what will suit me better out of a SIPP, ISA, LISA, etc. I am not too bothered about having access to funds before retirement

Any advice would be welcome.
Many thanks


  • AlbermarleAlbermarle Forumite
    3.9K posts
    1,000 Posts Second Anniversary Name Dropper
    As a higher rate taxpayer , putting any extra money in a pension is normally a no brainer .
    The only caveat is that you can only get 40% tax relief on tax you have actually paid .
    So if you are only just about a higher rate taxpayer ( say with salary not much over £50K ) then the 40%tax relief is a limited benefit . If you earn significantly more , then the pension is the obvious route.
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