Understanding my Pension Options.

Hi all.

I'd really appreciate the opinions of the posters on this forum to help me with understanding the options I have when it comes planning for my (and my Wife's) future retirement.

I am 52 years old and a member of my workplace DC Pension Scheme. The pot currently stands at £84k after 8 years service. I also have two deferred pensions with former employers and these stand at £53k and £50k (total pension funds stand around £187k) and one small pension with the MOD which will pay around £2k pa and small lump sum of £6k payable when I reach 60 years old. We have £100k saved in Cash ISA's and a further £60k held in various bank accounts.

My wife is also 52 and has a DB Pension with the Local Authority which, according to her last projection, should pay around £15k pa at age 67.

We're not entirely sure when we plan to retire or what income we'd need/like but we'd like to maximise our retirement income as much as possible now by perhaps using any savings we currently have to pay lump sums into our pension funds. Given the poor return on any savings we have, is this a sound idea ? For info, I am a 40% tax payer, my wife - 20%.

I can currently, comfortably save around £2.5k per month after all other expenses.

Any alternative suggestions ? 

Thanks


Replies

  • AlbermarleAlbermarle Forumite
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    Getting maximum higher rate tax relief from pension contributions would sound like a priority .
    £60K in bank accounts sounds a lot . Maybe shift most of it into Premium Bonds?
    Your wife could investigate the possibilities to take her pension before 67?
    Have you reviewed your investments within the three DC pensions. Are they suitable for what you want to achieve?
  • Out_of_TownOut_of_Town Forumite
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    "Have you reviewed your investments within the three DC pensions. Are they suitable for what you want to achieve?"

    To be honest, I'm not too sure about investments etc so wouldn't really be confident about that. I think an income of around £25k - £30k would be enough until state pension.
  • edited 30 July 2020 at 6:32PM
    xylophonexylophone Forumite
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    edited 30 July 2020 at 6:32PM
    Do the deferred DC pensions have any safeguarded benefits, guaranteed annuity rates for example?

    If not, and if your current scheme allows, is it worth considering a transfer in?

    As a higher rate tax payer, it is certainly worth considering contributing enough to your pension to avoid paying higher rate.

    Had your wife considered  AVCs? https://www.lgpsmember.org/arm/already-member-extra.php#:~:text=Additional%20Voluntary%20Contributions%20(AVCs),benefits%20to%20your%20LGPS%20benefits.&text=You%20can%20elect%20to%20pay,into%20an%20in%2Dhouse%20AVC.
    Have you both obtained state pension forecasts?
    https://www.gov.uk/check-state-pension
  • MarconMarcon Forumite
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    Drewsy said:
    "Have you reviewed your investments within the three DC pensions. Are they suitable for what you want to achieve?"

    To be honest, I'm not too sure about investments etc so wouldn't really be confident about that. I think an income of around £25k - £30k would be enough until state pension.
    In one breath you're dismissing the option of informing yourself about fund choices, and in the next hoping that you'll be able to achieve the income you say you want. You can do one of two things: pay for advice, or take a deep breath + wet towel/stiff drink (or whatever helps) and do a bit of basic reading. Your scheme booklet/pension provider's website are both likely to contain plenty of information about your fund choices and why/when you might select them. You could also look here: https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/choosing-investment-funds and then, if you need further explanations, give TPAS a ring (contact info via the link I've just given) for free, impartial information. They don't give financial advice, but if you arm yourself with the basics, you may be pleasantly surprised how quickly you cotton on and have the confidence needed to make some decisions for yourself.
  • Out_of_TownOut_of_Town Forumite
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    Thanks for all the advice and also the kick up the butt re investment choices.

    I'll start looking into this.




  • AlbermarleAlbermarle Forumite
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    Drewsy said:
    Thanks for all the advice and also the kick up the butt re investment choices.

    I'll start looking into this.




    Normally with DC employer pensions , if you make no choice of investment fund , then your money goes into a default fund .
    This will be normally be middle of the road for risk/potential for growth , although each provider will not have identical default funds. Sometimes default funds are so called lifestyle funds . These adjust the risk/growth potential according to your age /nearness to retirement , which may or may not be suitable for you personally.
    I think >90% of pensions are invested in default funds because most people are clueless about such things and make no choices them selves. It is not  a disaster to be in a default fund by any means but better to make your own choices if you can .
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