Very basic pension advice..... absolute beginner!

xylophone

I know I will get a state pension at retirement age of 67 (worked full-time, PAYE, since I was 21, so full NI contributions) 

What exactly does your state pension forecast say? Link in post above.

LHW99

Yup, this is my start point in my education. I did a bit of asking around, friends my age and older, and I know I will get a state pension at retirement age of 67 (worked full-time, PAYE, since I was 21, so full NI contributions) and I know I need to top that up. That would be to buy an annuity using the pension pot (I have heard women get a worse deal as they live longer) and/or a draw-down.

Do check your state pension as xylophone says - you will be under the "transitional rules" so number of years worked is only partly relevant, because there was a change in how things were calculated in 2016. Post the details here if you don;t understand what it says and someone will help.

Also, most people don't buy annuities nowadays, as they tend not to be good value when you are younger (60's). It could still be right for you, but there are other options now.

speedysloth

Thanks for the recommendation to check state forecast - I had thought it was just a set rate..... I will check that. Thank you!

speedysloth

OK state pension forecast checked, and it's £10,400 pa. 

xylophone

OK state pension forecast checked, and it's £10,400 pa. 

£200 a week? This is higher than a full New State Pension (currently £175.20 a week).

It reflects the Additional State Pension (State Earnings Related Pension/State Second Pension) accrued between your starting work in around 1984 and 2016 (when the old Basic State Pension/ SERPS/S2P system ended).

It will revalue each April, currently under the "triple lock" (in respect of the amount representing a full NSP) and by CPI in  respect of the balance (the so called "protected payment").

https://www.gov.uk/new-state-pension/how-its-calculated

https://www.ifs.org.uk/publications/15132 may be of interest.

MallyGirl

If you like the John Edwards book then he has a few related ones that are worth a read too.
At this point you just need to do quite a bit of reading. Gather the info on your current pensions - fees, what they are invested in. Watch for the word 'life styling' as this is an approach that moves your investments into a lower risk portfolio (more cash/bonds) for you ready to buy an annuity. For most people this is no longer appropriate but it is often on the default plan.
work out what you can afford to put in - you are in catch-up now.

Albermarle

speedysloth said:

Dazed_and_C0nfused said:

Are your pensionable earnings sufficient to contribute £30-40k?

OK, I had no idea there was a pensionable earnings value or what that would be..... I get a basic+commission bonus, anticipated to be £80k+. Does that answer the question...?
I think there is a cap at £40k a year though on the total contribution you can put in. 

I am not making any judgement , but considering your income , your pensions at age 58 are really very small .
Is it a new job ? Or do you like to spend ?
Anyway your plan to add a lot more to your pension for the next few years is very wise.
As you are a higher rate taxpayer , do not think about investing in ISA's etc, just get as much in the pension as possible ,as the higher rate tax relief is a very generous tax break which might not last forever. 

trevjl

MallyGirl said:

If you like the John Edwards book then he has a few related ones that are worth a read too.
At this point you just need to do quite a bit of reading. Gather the info on your current pensions - fees, what they are invested in. Watch for the word 'life styling' as this is an approach that moves your investments into a lower risk portfolio (more cash/bonds) for you ready to buy an annuity. For most people this is no longer appropriate but it is often on the default plan.
work out what you can afford to put in - you are in catch-up now.

Sorry to hijack a little. Can you elaborate. I am in this position with my company Avia DC pension. It was doing great up till a year or two ago, but seems to have rather stagnated with a pretty rubbish £900 investment gain in the last 12 months on around +£180K pot. I looked yesterday and it is in a "lifstage" investment 82%/18%. Much too cautious for my liking as I have a DB to come too.

MallyGirl

Last year was not a normal year.
basically it is likely that the default portfolio, if based on the 2 funds above, will sell the risk level 5 units to buy more of the risk level 2 ones (and maybe also start holding cash) in the run up to your stated retirement date. I would expect you can opt to chose your own investments instead - from a list - to stop this glide down to 'safe' from happening 

Ciprico

FWIW I was in similar situation a couple of years ago, several DC pensions, all 3 totally neglected, though still contributing to one. After looking at the contents, and costs, it was a no brainer to move to a modern platform and amalgamate. I used Interactive Investor, but I am sure other platforms are equally as good. For me charges were one of the the main motivational forces, I was paying between .8 and 1.2% in charges (on old Stakeholder pensions), which amounted to 1000's of £ per year. My current platform charge £20 per month.  Another benefit is options when withdrawing pension. A SIPP  offers many more options than older Stakeholder pensions. The final consideration was was to put in pension once transferred to II. This depends on your risk tolerance/age etc, the options may look mind boggling. Suggest start by researching Vanguard VLS60 and take it from there, it may not be the best for you, but there are certainly many worse options!