Why do posters here have disproportionately higher than average pension funds...

Pile_o_stone

Bravepants said:

antdon said:

couriervanman said:

OP I've always loved these posts as well your not the only one
Its always somebody who is mortgage free in a £500k house with £150k in isa,generous pension pot £350k increasing by £1k a month top up with a partner who has retired a few years earlier on £20k a year.+ £100k savings. And they always ask will i have enough to last for 20 years,plus they forget the £180 a week they will collect at 65. 

Lol...  I can remember a poster a couple of months ago saying  they will have £1000000 in their pension pot when they are 35.... and asking will it be enough.....lol  omg perhaps it's an age thing.......

Drawing down a £1,000,000 pot at a very safe 3% a year amounts to £30000 a year BEFORE tax, so  £26,500 per year...doesn't sound so much now huh? I could live on that though.

It also depends on what assets the pension pot is invested in. If he was invested in 100% equities, he could expect maybe a drop of 50% in a crash, being left with £15,000 a year at 3%, or £14,500 after tax...just above average UK wage level.

Retirement investments are not all about the magnitude. Having £1M in a pension sounds a lot until you start to think about how you are going to use it over a 30 or 40-year retirement.

If I was the 35-year-old, purely relying on DC pensions, I would want another million in my pot before I go, just to be safe.

You don't need millions though. Most people can easily accommodate a reduction in income of 50% or more in retirement. You don't have to pay into a pension scheme (so that's 20% of my pre-tax income right there), you won't be paying a mortgage (that's another 20% of my income), you won't be paying into a life assurance policy, you won't be paying national insurance. You will also be in receipt of a state pension of £8500  a year (if you have made full contributions - and you should make sure you do). You also won't be paying for that train season ticket, or fuel & parking costs if you commuted to work, etc. etc. 
Rather than worrying about the size of their pension pots, people should work out how much income they need in retirement, and they should be realistic about it and take into consideration the things I listed above (and more).

Prism

Pile_o_stone said:

Prism said:

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s.

I get a 0% employer contribution and have never received one in my working life - yet I still manage to contribute enough to a pension. Stop worrying about what others get or don't get and focus on yourself - you'll be much happier.

How does you employer get around the Workplace Pension regulations? The table below show the rates an employer has to contribute:

Up until 5 April 2018	1%	2% (including 1% staff contribution)
6 April 2018 to 5 April 2019	2%	5% (including 3% staff contribution)
Current rates - 6 April 2019 onwards	3%	8% (including 5% staff contribution)

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay

I am not an employee but run my own limited company. Before that I was self employed and my original employers didn't have a pension scheme. So I do pay into a SIPP but I need to fund that myself, through my company. 

I guess its technically salary sacrifice and the line is blurred between what the company pays and what I would otherwise pay myself.

AlanP_2

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s.

Colleagues of mine in local government are working from home on full pay and startingf their first online meeting at 7am with the last one endiong at gone 7pm to try and keep up with the demands on them as a result of Covid and their normal day job.

Your friend at the Home Office is very fortunate by the sounds of it and is probably in a low value / low contribution "nothing" job. Whether he is in the ofifice or not if he only needs to do 2 hours a day then location won't make a difference.

The public sector will see massive job losses as a result of Covid, or at least a massive shift in the skills / sectors where jobs are. Hopefully frontline NHS will be safe and hopefully they will at long last sort out the Care sector (but don't hold your breath on that one) but many, many back office / "boring council / civil service stuff" will be curtailed, cut or outsourced as the books have to be balanced somehow.

Pile_o_stone

Prism said:

Pile_o_stone said:

Prism said:

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s.

I get a 0% employer contribution and have never received one in my working life - yet I still manage to contribute enough to a pension. Stop worrying about what others get or don't get and focus on yourself - you'll be much happier.

How does you employer get around the Workplace Pension regulations? The table below show the rates an employer has to contribute:

Up until 5 April 2018	1%	2% (including 1% staff contribution)
6 April 2018 to 5 April 2019	2%	5% (including 3% staff contribution)
Current rates - 6 April 2019 onwards	3%	8% (including 5% staff contribution)

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay

I am not an employee but run my own limited company. Before that I was self employed and my original employers didn't have a pension scheme. So I do pay into a SIPP but I need to fund that myself, through my company. 

I guess its technically salary sacrifice and the line is blurred between what the company pays and what I would otherwise pay myself.

I used to be a contractor with my own limited company. My company paid a decent amount into my pension pot and into my wife's pension pot (she was the company secretary) as it was a fantastic way to reduce my limited company's tax liability. For tax purposes, the pension contributions were listed as Employer Contributions. 

Albermarle

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s.

There are plenty of private sector employees 'working' from home , who are not very busy either .
For example you could have a job where you are not easily replaced but due to the virus you are constrained in what you can do.
Plus as said elsewhere some public sector employees are working all hours god sends due to the virus, although some not.

marlot

antdon said:

Ok.  I am just 60 and have just had my 1st pension start paying (superannuation).....
So for a while now I have been trying to follow the posts on this forum to attempt to gain a little knowledge.....

But,  my question is...
Why do the majority of posters in this forum appear to have much larger pension pots than the average person in the UK???
(Lost count of the number of times I have read 'Can I survive on my £1 million pension pot.")....
Oh! And surely if your pot is so large you should be speaking to an IFA?

When I was working, I was putting 70% of my gross salary into my pension.  All part of the plan to allow me to retire at 55.
Others spent their money on smarter houses, cars, etc.  But I preferred to live a relatively frugal lifesyle which continued into retirement.  I made my own coffee, brought packed lunches etc when working - but had the bigger picture in mind.
I hate it when people tell me I'm 'lucky' to afford retirement.  Relatively little luck involved!

Prism

Pile_o_stone said:

Prism said:

Pile_o_stone said:

Prism said:

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s.

I get a 0% employer contribution and have never received one in my working life - yet I still manage to contribute enough to a pension. Stop worrying about what others get or don't get and focus on yourself - you'll be much happier.

How does you employer get around the Workplace Pension regulations? The table below show the rates an employer has to contribute:

Up until 5 April 2018	1%	2% (including 1% staff contribution)
6 April 2018 to 5 April 2019	2%	5% (including 3% staff contribution)
Current rates - 6 April 2019 onwards	3%	8% (including 5% staff contribution)

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay

I am not an employee but run my own limited company. Before that I was self employed and my original employers didn't have a pension scheme. So I do pay into a SIPP but I need to fund that myself, through my company. 

I guess its technically salary sacrifice and the line is blurred between what the company pays and what I would otherwise pay myself.

I used to be a contractor with my own limited company. My company paid a decent amount into my pension pot and into my wife's pension pot (she was the company secretary) as it was a fantastic way to reduce my limited company's tax liability. For tax purposes, the pension contributions were listed as Employer Contributions. 

Yes its certainly a great way to contribute. From a tax perspective its simply a company expenses and doesn't differentiate between what is a company contribution or employee. For that matter its no different from a corporation tax point of view to a salary. 
Doris540 has an issue with public pensions without seemingly understanding that pension payments are the equivalent of a salary enhancement and in the case of public sector jobs often reduce the take home salary to account for the higher contributions.

Albermarle

I'd take these DC £1m pots with a pinch of salt as people would either have to be on very high salaries (+£100k) and you have to wonder why they would be on a moneysaving website, or they are on a reasonable salary and they are living a sparse life and are scrimping and saving every spare penny which makes you wonder just what they will do with this large pension income as they didn't spend money when they were young, fit, confident and adventurous and probably won't when they are old, perhaps infirm and have had a lifetime of scrimping. 

Of course to build up £1M you need to be on above average salary but not necessarily >£100K.

Some careful spending management will come into it but that is not the same as scrimping and saving every spare penny . It means more that you do not let the money run through your hands like water , like a lot of people do. 

Also of course it helps if a partner works/has some income and there are no expensive traumas like divorce etc

I think quite common is also making max contributions for the last few years before retirement , so that could easily add £250K .

Finally until Covid , the markets had a very positive 10 years with just the odd blip. 

Usually people who are careful with money don't suddenly blow it in old age 

This statement is definitely true !

Prism

Albermarle said:

I'd take these DC £1m pots with a pinch of salt as people would either have to be on very high salaries (+£100k) and you have to wonder why they would be on a moneysaving website, or they are on a reasonable salary and they are living a sparse life and are scrimping and saving every spare penny which makes you wonder just what they will do with this large pension income as they didn't spend money when they were young, fit, confident and adventurous and probably won't when they are old, perhaps infirm and have had a lifetime of scrimping. 

Of course to build up £1M you need to be on above average salary but not necessarily >£100K.

Some careful spending management will come into it but that is not the same as scrimping and saving every spare penny . It means more that you do not let the money run through your hands like water , like a lot of people do. 

Also of course it helps if a partner works/has some income and there are no expensive traumas like divorce etc

I think quite common is also making max contributions for the last few years before retirement , so that could easily add £250K .

Finally until Covid , the markets had a very positive 10 years with just the odd blip. 

Usually people who are careful with money don't suddenly blow it in old age 

This statement is definitely true !

I think fairly often people are referring to £1m for a couple rather than £1m per individual and on that basis it can be pretty easy to hit that target especially if the income is balanced between two salaries. Double company contributions, double tax benefits.

A couple on £30k each contributing 10% for 35 years should do it. I know plenty of couples both in the 50-100k region though it probably took a few years to get to that point. On salaries like that you are possibly looking at a pot £3m+

Retireinten

doris540 said:

Friend of mine who works at The Home office in London is working from home on full pay, They said their work load equates to a max of 2 hours a day and that theyve been told they wont be back in the office until at least next March. The public sector wont see massive job losses over the forthcoming months either. Many in the private sector will see their jobs go and in turn their pensions  grind to a halt along with a bleak outlook. Just remember those that are furloughed in The Public sector which in proportion to The Private sector is minimal are still getting a far higher percentage paid into their pensions by the state ie the tax payer  than we are in the Private sector Bravepants. Imagine in the government turned round and stopped the public sector taking their pensions early or massively reducing down to 5% employer contributions like we are subjected to. . Be like The Poll Tax riots in the 80s

Is this really just limited to the public sector though? Two friends of mine, both private sector, not furloughed but had very little to do whilst working from home. Now back 'at work' and their jobs look safe. But they are the first to admit they've had it pretty good. 

I work for a local authority. I can't speak for all public sector organisations obviously but I can tell you that many Councils are under significant financial pressure and there WILL be job losses. Many of the COVID19 announcements made by the Government have been delivered by Councils, but the costs have simply not been covered. Add in massive reductions in commercial income (rents, leisure centres, museums, cafes, theatres, car parks, events etc), which many councils are heavily reliant on to fund services and there is no question that jobs and services will go over the next few months. 

My team provides essential services and have been working flat out... yes from home (mainly) ... during this time. Average salary is around £22k. And many of my colleagues have been doing the same, some in completely different jobs to what they were doing six months ago, becauseif we haven't furloughed we've redeployed elsewhere. 

Getting back to the thread. We do have a fantastic pension scheme for which I am very very grateful for.  I am constantly shocked at the lack of understanding as to its value even by our longer standing employees. Whereas I know exactly how much I add to my LGPS pension for every month I work...