Pension fund estimate

Gengis

Hi - I am 48 this year (August) and trying to retire age 62 so have 171 pay days left.  My pension pot is £311k and my total contributions are 23% so £1333 per month via salary sacrifice.  I could increase to 25% but want to try and start saving a bit for the kids i.e. pension / ISA and pay the mortgage off by age 62.

I want to have roughly £30k gross pension at 62 after 25% tax fee sum.  My company was taken over last year so the pension fund has changed but the pension company remains the same Ageon ARC (retireready)

Pension 1 - Ageon ARC £300k  -  i am not making any contributions into this 
a)    Aegon BNY Meloon MA Growth ARC pn
b)    Scot EQ Baill Giff 60/40 WWEQ PN ARC
c)   SE UNI LFS Collection ARC
d)   Scot EQ Growth Core Ptfl Arc 

Pension 2 - Ageon ARC - £11k - contributing 23% 
1 fund Ageon Aon Mgd Core Ret Pathway Arc PN (risk 5) - this is a default fund I have been in since July 2022.  I am ok with risk 5 at the moment.

I have used a few compound interest calculators using 3-4% (so quite conservative) and I would hope to have around £700k by age 62 is that realistic?  Pension 1 = £450k and Pension 2 £260k ish.  I would hope that is achievable because i will be paying in £228k (171 x £1333).  I have seen annuity rates at around £5000.  My partner has an NHS pension so I may not need a joint one.  

The Ageon Retireready calculator seems to be giving me different figures every day as what my final pension fund would be.  I am not taking into account inflation (spending power) - if i get the mortgage paid off I can live on around £2000 - £2200 net per month and i can use the 25% tax fee sum to top it up until i get the state pension so hopefully age 67 ish! I should have around £38-£40k with the state pension.

So does this should realistic?  Would you recommend I change the funds i.e. consolidate both pension or choose different funds if so I will need an IFA because i am not confident on that.  Pension fund 1 lost a bit over last 2 years but over last 6 months has bounced back with an invest return of around £27k - £28k.

I was thinking about waiting until age 50 and seek advice from Pension Wise as it is free - some quotes for IFA advise is around 1-2% of the fund which seems a bit high as I am not seeking to move from Aegon but advise on the funds within their platform.  

Thanks for any help.

Dazed_and_C0nfused

Do you currently have £311k or £611k?

My pension pot is £311k 

Pension 1 - Ageon ARC £300k - i am not making any contributions into this

Pension 2 - Ageon ARC - £311k - contributing 23% 

scobie

I’m confused.  You say you have £311k and then list two pension funds which seem to suggest a combined £611k.   

Either way, given you are contributing a healthy sum monthly you will have no problem reaching or even substantially smashing your target. 

Gengis

Sorry for the confusion - i made a typo pension fund 1 is £300k and pension fund 2 is £11k (just t/f over last year).  So I have at the moment £311k in total.

If I had £600k i think i would be retiring this year!!

thanks for any help on this - not sure why but been panicking about it a bit. 

dunstonh

I was thinking about waiting until age 50 and seek advice from Pension Wise as it is free - some quotes for IFA advise is around 1-2% of the fund which seems a bit high as I am not seeking to move from Aegon but advise on the funds within their platform.  

IFAs are independent of each other and each has their own charging structure.   However, a cap and collar or tiering of the charges is fairly common.    Seeing caps of around £3000 is not uncommon nowadays on mainstream transactions.

Pensionwise does not give advice.

JohnWinder

 I am not taking into account inflation (spending power)

I don’t know what you mean by that, but 14 years of inflation could be important.
When I use your figures and a compound interest calculator I get about 2.2%/year as the average compounding real return you need to give you £700k of today’s spending power, in 14 years. I don’t think too much to hope for.
To help, you could pray your P2 fund does terribly for several years while you pour money into it buying cheap assets, but not so poorly that too many investors bail out of it forcing it to close, then goes crazy up for a few years.

Albermarle

I am not taking into account inflation (spending power) - 

Then you should.

I have used a few compound interest calculators using 3-4% (so quite conservative)

3-4% before inflation is conservative

3-4% after inflation has been achievable in the past, but to be more cautious probably better to work on 1 or 2%.

Linton

In my plans I assume 3% long term inflation and 4% long term equity investment return.  Better to make cautious assumptions and be happy when you turn out to be richer than planned than the reverse.