Sound Pension Advice Sought

conks

Hi,

I've always been slightly at odds with pensions and despite having taken some advice in the last 18 months I'm still trying to decide the best way forward.

Currently I have a workplace pension which I contribute 4% with my employer contributing 4%. Their contribution automatically increases after so many years service being capped at 8%. I've been with the company for 2 years.

Prior to this I've had other workplace pensions via past employers. They don't total an awful lot.

My IFA suggested perhaps consolidating all into one but then suggested sticking with my current pension plan given the contributions from my employer.

I'm 46. I have a wife and two young children. When using online pension calculators the suggestion is to realise a annual pension income of £30k I would need to save circa £2k pcm! Ouch. Realistically I could probably save £500 pcm.

This also accounts for the state pension with a retirement age of 67.

Any guidance & advice welcome.

Thanks.

Thrugelmir

Save what you can reasonably afford to. Once the children are financially independent, and the mortgage is paid off (if you have one). There'll be an opportunity for a late boost to your retirement savings.

conks

OK. Thanks.

LHW99

Is that with / without the employer contribution?

Marcon

conks wrote: »

I'm 46. I have a wife and two young children. When using online pension calculators the suggestion is to realise a annual pension income of £30k I would need to save circa £2k pcm! Ouch. Realistically I could probably save £500 pcm.

Pension calculators never take into account just how expensive family life can be. No point at all in saving so much 'for the future' that you either have to borrow to live now, or you end up in debt. If you can comfortably save £500 pcm, do so - but make sure you have a good rainy day fund before you start looking at a 20+ year horizon.

Review your savings on a regular basis (tax or calendar year end, when you have a pay rise, or some other sensible point) and increase when you can.

The other thing you can do now is look at any savings you can make in terms of reducing your spending. Keeping a spreadsheet of all your outgoings for at least 3 months (yes, every last penny) often highlights areas which could be trimmed relatively painlessly.

greatkingrat

conks wrote: »

Hi,
I'm 46. I have a wife and two young children. When using online pension calculators the suggestion is to realise a annual pension income of £30k I would need to save circa £2k pcm! Ouch. Realistically I could probably save £500 pcm.

Firstly do you actually need 30k pa in retirement? If you have paid off the mortgage, and the kids haved moved out, you may find you need less than you think.

Also have you taken into account the state pension you and your wife will get?

xylophone

Prior to this I've had other workplace pensions via past employers. They don't total an awful lot.

What kind of pensions?

tacpot12

You should keep contributing to your current employer's pension to get their contribution and the tax relief; you are paying 2.8% of your salary and getting 12% put into a pension that is your money - that is a great deal!

Whether or not to consolidate your other pensions depends on what the effect of charges are on those pensions - you need to ask your IFA to show you how much consolidating would save. It if won't save anything, or if it would cost you money, don't do it. Just keep a log of all your pensions, and let the pension providers know if you move house.

If you can contribute more to a personal pension than your employer will let you contribute to their scheme, ask your IFA about for their recommendations of a new pension provider. Charges are the most important thing here - you want the cheapest (mainstream) provider. Contribute what you can, but look to increase the amount as soon as you can.

Does your wife have any pension provision? If not, they you probably will need closer to £30k pa to live on even after the children have left home and the mortgage is paid off. (My partner and I each have our own good pension provision of around £20k each and while we are not able to take an overseas holiday every year, we know we can cover all the costs of maintaining our property and lifestyle over the long term.) You might need to look at cutting some costs from the family budget now, because when your children are grown up they are not going to be able to support you - you need to provide for yourselves now while you are fit and healthy.

Albermarle

Not sure why you pay for an IFA and then ask questions on an internet forum ? Presume he can answer your questions best as he knows all your details .
TBH , your situation seems quite simple and straightforward and we are not taking about large sums , so what was your rationale for employing /paying an IFA ?