How much should I be paying in at 55?

Whiterose23

barnstar2077 said:

Whiterose23 said:

barnstar2077 said:

As they are paying the minimum I doubt very much that they would allow you to use salary sacrifice if you upped your contributions, as it would involve some kind of effort on their part.

Assuming your company don't allow you to salary sacrifice you could open your own SIPP (Self Invested Personal Pension) online and pay money into that.  It would gain a 25% uplift automatically on monies that you pay in. 

Personally, I buy a Vanguard Lifestrategy fund on Vanguards own site.  In your position I would be tempted to go for a more volatile (but hopefully more lucrative) fund like VLS80, which would be 80% shares in companies, and 20% bonds, because you already have other pensions so it maybe worth playing a longer game with this money. 

Hi, I don’t know much about investing but I am interested. How much would I need to open a SIPP and also how much should I pay in per month for it to be worth it over the next ten years? Sorry for all the questions!

Vanguard require either a £500 deposit or a £100 a month direct debit.  I opted for the £500 initial deposit as I want to be able to control how much I add on a monthly basis if necessary (So I just log in every month and add money to my SIPP from a debit card.)

It depends what you mean by worth it.  This calculator could give you a rough idea though:

Compound Interest Calculator (Daily, Monthly, Yearly Compounding) (thecalculatorsite.com)

As an example, a £500 deposit, with a £200 monthly amount added (entered as £250 because of the free 25% uplift) and a 5% return calculated yearly would give you a pot just shy of £40k in ten years.  Increasing your contributions by inflation each year (say 2%) would also help, but that would also depend on if you have the spare money or get regular pay rises.

I would go longer than the ten years though if you can with this money, assuming you already have other money coming in when you are retired, as you will hopefully want to fund a long and happy retirement.  It also gives you the flexibility of not having to withdraw funds during a down turn.

This is good info thanks ... could I ask is there a minimum you have to pay in each month if it’s opened with a £500 deposit?

Marcon

Albermarle said:

As you are at age you can now access DC pension pots then you do have ability to get cash in emergency although that can trigger the strict limits on future pension contributions - somebody more knowledgable than me can probably clarify.

As long as only the tax free cash is taken from a DC pot , then the limits on future contributions are not affected .

As soon as you take one penny in taxable income ( even if you do not pay any actual tax on it ) then your are limited to £4k pa contributions in future .

Not if:

• it is classed as a 'small pot' (i.e. under £10,000) and you take the whole lot in one go, specifically citing that you are cashing in a small pot; or
• you use anything in excess of the tax free 25% to buy an annuity. The £4K future contribution limit only applies when you access your DC benefits 'flexibly'. 

DT2001

When are you aiming to retire?
If at SPA then you will get £8.2k from DB pensions (assuming they increase by RPI/CPI) plus SP (you say you’ll get the full amount) of £9.1k. So you need about £3k extra to get just over £20k. Working on the basis of a pot 25 times that value means £75k total needed.
If you post your lower/upper contributions someone on here will have a spreadsheet to give you end figures assuming moderate growth from now. If you wait until SPA you’ll have extra £8k income for last 2 years from DB pensions.
Do your DB pensions have any GMP element as that will affect their increase or a SP reduction?

barnstar2077

Whiterose23 said:

barnstar2077 said:

Whiterose23 said:

barnstar2077 said:

As they are paying the minimum I doubt very much that they would allow you to use salary sacrifice if you upped your contributions, as it would involve some kind of effort on their part.

Assuming your company don't allow you to salary sacrifice you could open your own SIPP (Self Invested Personal Pension) online and pay money into that.  It would gain a 25% uplift automatically on monies that you pay in. 

Personally, I buy a Vanguard Lifestrategy fund on Vanguards own site.  In your position I would be tempted to go for a more volatile (but hopefully more lucrative) fund like VLS80, which would be 80% shares in companies, and 20% bonds, because you already have other pensions so it maybe worth playing a longer game with this money. 

Hi, I don’t know much about investing but I am interested. How much would I need to open a SIPP and also how much should I pay in per month for it to be worth it over the next ten years? Sorry for all the questions!

Vanguard require either a £500 deposit or a £100 a month direct debit.  I opted for the £500 initial deposit as I want to be able to control how much I add on a monthly basis if necessary (So I just log in every month and add money to my SIPP from a debit card.)

It depends what you mean by worth it.  This calculator could give you a rough idea though:

Compound Interest Calculator (Daily, Monthly, Yearly Compounding) (thecalculatorsite.com)

As an example, a £500 deposit, with a £200 monthly amount added (entered as £250 because of the free 25% uplift) and a 5% return calculated yearly would give you a pot just shy of £40k in ten years.  Increasing your contributions by inflation each year (say 2%) would also help, but that would also depend on if you have the spare money or get regular pay rises.

I would go longer than the ten years though if you can with this money, assuming you already have other money coming in when you are retired, as you will hopefully want to fund a long and happy retirement.  It also gives you the flexibility of not having to withdraw funds during a down turn.

This is good info thanks ... could I ask is there a minimum you have to pay in each month if it’s opened with a £500 deposit?

I don't think there is a minimum amount you could add to the pension as cash (after the £500 deposit), but there maybe a minimum amount you would need to buy into your chosen fund (The VLS100 fund in my case.)  I have never bought less than £100 at time so I cannot answer that, there maybe someone else who can though?

barnstar2077

DT2001 said:

When are you aiming to retire?
If at SPA then you will get £8.2k from DB pensions (assuming they increase by RPI/CPI) plus SP (you say you’ll get the full amount) of £9.1k. So you need about £3k extra to get just over £20k. Working on the basis of a pot 25 times that value means £75k total needed.
If you post your lower/upper contributions someone on here will have a spreadsheet to give you end figures assuming moderate growth from now. If you wait until SPA you’ll have extra £8k income for last 2 years from DB pensions.
Do your DB pensions have any GMP element as that will affect their increase or a SP reduction?

You only need £75K if you want the money to last forever (hopefully.)  There is nothing wrong with taking £3k a year for x amount of years until the money is gone.  I agree in an ideal world it would be better to have the greater capital, but it is much, much harder to achieve, and people don't live forever and you can't take it with you.

Whiterose23

I’m hoping to retire at 65 when my DB pensions kick in... if I can get by for two years until SP.

Whiterose23

DT2001 said:

Do your DB pensions have any GMP element as that will affect their increase or a SP reduction?

Yes I believe so; the larger DB one mentions GMP needs to be calculated but I don’t know how much that will equate to.