Advice and help with my pension - Pension Newbie

regularsaver

Good evening all,

I have been thinking a lot about my pension recently. I want to make sure its setup in the best way for me. My issue is I dont really understand a lot about them. At the moment I pay 5% and my employer matches this, so 10% of my salary is paid into my pension per month.

About 2 years ago I moved in two previous work pensions into my current employers one. I have been with my current employer for 13 years. I am 36 years old and I believe my pension is in a low/medium risk investment strategy. I just had an annual statement through and it seems to have barely grown at all since the previous year which is why I have become concerned (I worry a lot about things and pensions are a big thing arent they especially when you dont really understand them)

I believe current retirement age for men is 67 so I have another 31 years to work which makes me a long way out from retirement. Should my pension be in a high risk investment strategy due to retirement being a long way off so it grows as quickly as possible?

I am sorry if I am a bit vague, if there is anything you need to know to be able to assist me then please ask and I will do my best to answer/find out.

Dazed_and_confused

There is no "retirement age" for men.

There are often standard dates when pensions can be paid full stop or can be paid without reduction.

State Pension is more likely to be 68 for you and cannot be paid earlier.

You need to check your own scheme rules to see what the normal retirement age is for your employer.

JoeCrystal

There is never a wrong time to think about pensions! Ideally, when you start working so, I think you made a good start on it already. First of all, make sure that you maximise the employer's contribution if you can. With that out of the way, think about the ideal income you want to retire on and work out if you need to contribute more into the pensions. 10% of your salary is a good start, but it might not be enough.

What is the pension fund you are invested in exactly and with whom?

SonOf

I believe current retirement age for men is 67 so I have another 31 years to work which makes me a long way out from retirement.

You can retire when you like (or when you can afford to). There is no retirement age for either sex.

If you are referring to the state pension age, then this is just when the payment begins. Not when you actually have to retire. And its the same for men and women now.

I just had an annual statement through and it seems to have barely grown at all since the previous year which is why I have become concerned (I worry a lot about things and pensions are a big thing arent they especially when you dont really understand them)

2018 was a negative year on the markets. You get them every now and then. Negative years are good news for you. Not bad. Indeed, consistent growth years lower the returns compared to periodic negative/nothing years when paying in monthly.

Should my pension be in a high risk investment strategy due to retirement being a long way off so it grows as quickly as possible?

The greater the risk you take, the higher the returns will likely be over the long term (but not guaranteed). However, that also means there will be greater losses in the short term. Can you handle that?

crv1963

regularsaver wrote: »

Good evening all,

I have been thinking a lot about my pension recently. I want to make sure its setup in the best way for me. My issue is I dont really understand a lot about them. At the moment I pay 5% and my employer matches this, so 10% of my salary is paid into my pension per month.

About 2 years ago I moved in two previous work pensions into my current employers one. I have been with my current employer for 13 years. I am 36 years old and I believe my pension is in a low/medium risk investment strategy. I just had an annual statement through and it seems to have barely grown at all since the previous year which is why I have become concerned (I worry a lot about things and pensions are a big thing arent they especially when you dont really understand them)

I believe current retirement age for men is 67 so I have another 31 years to work which makes me a long way out from retirement. Should my pension be in a high risk investment strategy due to retirement being a long way off so it grows as quickly as possible?

I am sorry if I am a bit vague, if there is anything you need to know to be able to assist me then please ask and I will do my best to answer/find out.

There are several ways of viewing pensions- i) It is deferred salary taken after finishing working life (generally it is possible to take a pension and continue working) ii) It is a good way for your younger self to lock money away for your older self and even bankruptcy can't prise it from you (although a divorce can mean you are forced to part with some of it) iii) Everyone contributes- you, your employer and the Govt so it is a valuable commodity even if it occasionally drops in value.

Understanding them can seem complex but if you view it as savings for later life it is a start, get to know your own employer scheme- what the scheme is and the options for what happens to the money put into it. Defined Benefit or DB is excellent if you have access to one this usually pays a percentage of salary on retirement, most have defined contribution pensions or DC which is where you, your employer and through the tax system the Govt pay a percentage into your personal "pot". You seem to be describing a DC pension.

Next find out if your employer pays more into the scheme if you pay more in, some not all will increase what they pay in if you do. If you can afford to pay more in to get increased employers contributions then this is worth having.

Then find out if you are paying through salary sacrifice as in your taxable pay is reduced so saving you money but it does also reduce the amount some lenders will give you towards a mortgage.

There are lots of threads that go into more/ better informed detail than I can!

Once you know the answers above look at what you are investing in. Have a look at what your employer/ pension scheme offers as investment choices, look at your attitude to risk- if you ask someone will be able to point you towards a risk level tool- I'm not sure how to post a link! Once you know your risk level you can then change your investment options if needed.

I'd suggest at 36 higher risk level could be in order but it is your money and your risk not mine.

Many here plan to retire before State Pension Age -SPA. If you don't want to work to age 68 then this is a choice for you to make. have a look at "what's your number" or "plotting for an early retirement" threads for ideas/ get a feel for target pension income/ ages.

One way to help you is to look at what retirement income you think you'll need (in todays money) and then at what age you want it. There are plans which mean you'll be restricted to taking your personal pension 10 years before SP- currently it is age 55. So if you plan retiring before 58 (for you) then you'll need to look at bridging the gap from when you want to retire and age 58- there are lots of ways to do this on other threads.

Do not worry about it all! You're doing well looking at it now, I was 52! If you think too deeply or worry about every possible event then you'll be overwhelmed. Look at everything as a whole- housing, having some rainy day money, how much depends on what your outgoings are/ income level and then also look at partner pension (if you have one) to make sure when you retire you can make the most of tax allowances.

Don't be put off by some of the figures you'll read, some are large, some are more modest, some are small (to my mind), but it really is a case of each to his/ her own needs. You need to decide what is your target and then work backwards on a plan to meet it. We decided on a) Basic "must have" a sum that covers basic living, b) Would like- to cover desired lifestyle and c) Luxury target- to cover for us what would be a really good/ high standard of living. We aimed for (c) but will be content when we do retire to land in target (b).

Good luck!

regularsaver

Hi all, 

Thanks so much for the replies on this, I feel really bad for not getting back here to reply before now. I have been collating information and figures on my pension so far and will come back with some more information shortly. Your help is greatly appreciated.