Worried about starting pension later in life

ForestBluebells

I’m 35 and only started paying into a pension when auto enrolment started so only have a measly £3600 in there. Before that I wasn’t offered a pension through work and to be honest I’d never really thought about it on my own, I wouldn’t even know where to start (they really should teach this information in schools!). I’m currently paying the minimum as is my employer(me 5% and my employer 3%). I have a mortgage with 30 years remaining term although I was planning on starting to overpay this, I’m really hoping this isn’t my final home but not sure how likely I will ever be able to upgrade on a single salary either. I’m feeling a bit overwhelmed where to start and what I should be doing but I’m quite concerned that I won’t have enough to retire....ever! I’m determined to turn things around as best I can and start saving more for my future /towards paying off my mortgage (assuming that is a sensible use of money) and perhaps starting to invest also as an additional retirement pot. My question is what should I be doing? Paying more into my work pension? Set up a separate pension? Build up savings or investments? I currently have £22k in savings but some of this will be needed for renovations. Help?!

Dazed_and_confused

Roughly how much do you earn (taxable salary figure that goes on your P60)?

Don't forget the State Pension. If you continue working then this should give you £8.7k pension as a starter.

SonOf

I have a mortgage with 30 years remaining term although I was planning on starting to overpay this,

When you get your gas an electric bill, do you decide to overpay one of them and not pay as much to the other. Start treating your retirement planning as a bill to pay.

My question is what should I be doing?

Any solution is only as a good as what you pay into it.

You are late but not terminally late and it is recoverable but you need to take it seriously. Posting on here is a good start.

Paying more into my work pension?

Almost certainly will be. Especially if the employer pays extra towards your pension for your increased amount.

You could start another pension as well but its probably not worth it at this stage.

JoeCrystal

sambo84 wrote: »

I’m 35 and only started paying into a pension when auto enrolment started so only have a measly £3600 in there. Before that I wasn’t offered a pension through work and to be honest I’d never really thought about it on my own, I wouldn’t even know where to start (they really should teach this information in schools!).

That is the whole point of auto-enrollment, my employer only offered it due to auto-enrollment back in 2013, and indeed, it does include the people who don't think about it. While you got £3,600 in your workplace pension scheme, at least you are aware of the issue and are prepared to act to make up your shortfall.

sambo84 wrote: »

I’m currently paying the minimum as is my employer(me 5% and my employer 3%). I have a mortgage with 30 years remaining term although I was planning on starting to overpay this, I’m really hoping this isn’t my final home but not sure how likely I will ever be able to upgrade on a single salary either. I’m feeling a bit overwhelmed where to start and what I should be doing but I’m quite concerned that I won’t have enough to retire....ever! I’m determined to turn things around as best I can and start saving more for my future /towards paying off my mortgage (assuming that is a sensible use of money) and perhaps starting to invest also as an additional retirement pot. My question is what should I be doing? Paying more into my work pension? Set up a separate pension? Build up savings or investments? I currently have £22k in savings but some of this will be needed for renovations. Help?!

Increasing your contribution more is the only answer I can give if you want to increase your chance of retiring. Overpaying your mortgage is not necessarily a sensible use of money when the interest rate is so low. I would focus more on paying into my pension scheme than overpaying the mortgage.

ForestBluebells

I currently earn around £37k plus bonuses (maybe £1700 annually, it varies) I’m hoping to get a pay rise this month to maybe £40k. I will ask if my employer will pay a higher % matched contribution, what’s a good % to ask for?

JoeCrystal

sambo84 wrote: »

I currently earn around £37k plus bonuses (maybe £1700 annually, it varies) I’m hoping to get a pay rise this month to maybe £40k. I will ask if my employer will pay a higher % matched contribution, what’s a good % to ask for?

Whatever you can get away with! Considering you are getting quite a high salary, do you know if they make salary sacrifice on the pension contributions? That might be worth asking about.

ForestBluebells

They are a small company so I’m pretty sure none of this has ever been thought about so probably no but again I can ask. Is salary sacrifice a good thing for pensions then? I’ll ask for 10% matched contributions then although I have no idea what the “norm” is.

MallyGirl

There is no norm - it varies a lot. If I pay in 5% my employer puts in 10% but they won't go higher than that. I still pay in much more for the tax/NI benefits and because I hope to retire in 6 years time.
Salary sacrifice is good as it saves 12% NI as well as the 20% tax - some employers also give some or all of the employer NI that they save (13.8%).
Overpaying on the mortgage has no tax benefits but I can see why you want to look at this if you are not in your 'forever house'. Maybe do a bit of both if your current loan to value is high.

ForestBluebells

Thank you for responding, so I need to ask for salary sacrifice and 10% contribution? Or 20% contribution assuming I pay 10% and they pay 10%? I’m not confident I will get this but if I don’t ask I definitely won’t do. I’m just trying to understand what I’m asking for.

My current LTV is about 60-62%

tacpot12

My last employer paid 15% if I paid 8%, but they were a gererous employer when it came to pensions.

At your age, if you and your employer can save 20% of your salary into your persion you will be ok. Doing so will reduce the amount of spare cash you would have to buy somewhere bigger, but lots of people downsize when they retire, so it doesn't always make sense to buy a bigger place.

ForestBluebells

I can’t really downsize. I’m in a one bedroom maisonette. But I’m in an expensive area, the best I could do is relocate to a cheaper area on retirement if needed although I wouldn’t know anyone then, although to be fair I don’t know many people here either so it wouldn’t be too awful