Success Stories - Pensions

sho_me_da_money

This is a bit of a light topic where the idea is to highlight what successes you had with your pension pots.

Example - 

I contributed X and accumulated Y by Z year. Total appreciation was 'x' percent.

Just trying to learn the following that could inspire a range of people - those with no pension, those who started late etc.

- Did you have any crazy years where your pot stalled and was not appreciating and all of a sudden it multi bagged e.g. after the 2008 financial crash.
- Did you do anything to change the acceleration/growth of your pot i.e. regularly changed your pension products/investment funds
- Did you start loading hard when markets were down at the time of the 2008 financial crash?
- Did you discover something later that you wish you'd known sooner?

tacpot12

My success has been a slow affair. I got my first private pension when the new MD at the company I was working at wanted a good pension for himself, and did the right thing and setup a group private pension for everyone. This was in 1990. The company sold financial modelling software, so I modelled my pension and got under the hood of how it was supposed to work. This allowed me to 'keep the faith' with it as it's value rose and fell. I kept funding it during times I was self-employed, and was a bit surprised to find that as I approached 50 it was worth over £200,000.

Combined with other DC pensions setup by various employers, I ended up with a pension pot of £360,000 at age 53. I had been modelling the progression of this pot, so knew that by saving hard I could retire at age 53, so this is what I did.

I have been drawing down on my pension since I was 55 and have £75,000 of income in the last 4 years, 25% of tax free. About 18 months ago, the pot was worth £405,000, but this has now fallen to £355,000. This is not great performance, but it's all I needed to retire at 53. 

I have other DB pensions, a full state pension entitlement and a rental property, so I also have some diversity of income, but my private pensions have given me the financial freedom not to work beyond the age of 53. 

sho_me_da_money

Awesome tacpot. 

Love that win and hope you are enjoying your retirement.

My story so far

I have a long thread on MSE where 2 years ago (age 40) i thought I had no pension pot. I later realised that I had a couple of them and consolidated them under one provider to produce a total pot of £30K. My goal was/is to retire as early as possible, which for me will be 57 years old.

.....so I started loading hard via my employers salary sacrifice scheme.

I am 42 years old next month and have a pension pot of £90K with an overall appreciation of approx 2% since starting. My biggest advantage (I think) was to load hard whilst the markets have been down due to COVID, Russia etc. My pot has gone from being in the red (minus) to flat (zero) appreciation over the past two years. This is the first month I have seen a positive of approx. 2%. As things slowly start to turn positive, I am hoping I see bigger gains in the forthcoming years.

Some of the things i did thanks to the advice of fellow MSE community members:

- Go from contributing £150 per month to contributing £2500 per month with a 5% contribution from my employer
- Changed my default pension products/investments to higher risk equity funds
- Went from three funds that focussed on EU, UK and USA to two higher risk funds that are focussed on USA and Emerging Markets

FYI, I have no wife or kids.
I have a 80 grand mortgage left on a property worth around 300K.
I have no savings to my name
I can afford to pay my debts, bills and have around 500 quid of disposable cash left each month.

noclaf

 I wouldn't say my situation is quite a success (yet hopefully) but in.some respects finding this forum was a success as it allowed me to get the knowledge and insight from the helpful posters here to take my total pensions pot from circa £17k at 30 to £140k at 41

....long long way to go ...ideally a good outcome will be achieving a total pension pot of £500k or more at retirement however I'm dropping down to minimum sal sac contributions for a while to obtain max employer match as with a young child in tow want to build up my S&SISA and major house rennovation costs coming up next year. The question is can I achieve a £500k pot putting in around £1400 per month with the current growth trajectory.....

LHW99

Main thing I did (with no knowledge at all) was not opt out!

Then when FSAVC's became available (c.1987), put in a minimum amount (£25) per month, and did my best to find out what they were invested in - not easy as there was no internet  / google etc. I used newspaper finance pages to compare the default option with a higher risk / more adventurous option and found the higher risk one went up and down more, but overall went up more than down.

Because I started early, it meant when I left a PAYE job and started a business, not adding money for a few years didn't completely put the kybosh on my pension, especially when it became possible to make increased contributions in later years. I was also lucky to pay or be credited with NI most of my working life.

So have a small DB, full NSP and enough DC pension to ensure I can cover the basics, and any one-offs that arise.

JamTomorrow

A few stick out for me.

The first one was being lucky enough that early in my career my employer offered an employee match on pension contributions.  If I put in 4% they would add 8% and then if you were at 12%, they would also offer an additional 1 for 1 match for an extra 6% from employee and employer.  This was a no brainer for me, especially the extra 1 for 1 match but it amazed me how few people took this up.  I was only early 20s at the time but this set up a good discipline of making pension contributions and not becomeing accustomed to the extra standard of living if I had spent it instead.

Second one was around taking advantage of tax cliff edges.  This was first relevant for me after the child benefit change was introduced to erode the child benefit as you earned between £50k and £60k.  I was quite a bit above that when introduced but one year I felt I was behind on where I wanted to be in terms of my total pot and was also concerned on tax relief being reduced to a flat 30% or something similar.  Therefore I made a large one-off payment which took my taxable income to £50k and it was pretty sweet getting the child benefit for that into my pension rather than losing it completely.  I did make the mistake however with this one of making the payment out of taxed income/savings rather than salary sacrifice so I lost the 2% in NI.  Didn't make that mistake again.

Tax cliff edges are also relevant again now as with my income and an annual pension contribution of £40k (now upped to £60k) I could not get my income below ~£125k and was therefore getting the full hit of the 60% marginal rate when my PA is eroded.  My solution to this now is to put in £80k every other year which means my £80k pension contributions are made at a cost that is about £5k less for me (20% tax saving on the ~£25k of income that would otherwise have been taxed at 60%).

The latest one I am taking advantage of that frustrates me I never spotted or applied earlier is minimising NI through making my pension contributions through salary sacrifice in as few lumpy pension payments as possible.  As NI is calculated on period earnings (monthly for me) then by maxing my pension contribution in each month until I have reached my pension goal eliminates some NI at 12%, whereas a regular fixed monthly contribution was only reducing NI at 2%.  It means I am on minimum wage for a number of months but I top this up from savings.  I estimated this saves me somewhere between £500 and £1,000 per every 2 years contributing in this way rather than the way I always did. If i had done this from the start of my career I reckon it would have shaved another year off when work becomes optional; damn.

As my kids become adults and are likely to have the 9% drag to repay student loans I'd be interested in any tips on how people have managed this.  I fear they will face the nice to have problem in their late 20s or early 30s with a very high marginal rate of tax, with 40% income tax, 12% NI, 9% student loan repayment and loss of child benefit.  If any of my children have 3 kids and are earning £60k then they could have an effective marginal tax rate of 80% to 90% between £50k and £60k so i suspect that would be the best time for them to fully load pension for a few years, and therefore maybe neglect pension contributions until they hit that sweet spot.

cloud_dog

I was meandering towards retirement, with a fairly decent DB FS scheme to look forward to but it was probably almost 10 years ago when I really got my head down to understand where we were and what we might actually want, and this site was fab.  I look back at some of my early posts, and boy was I green (just a little less green now).

The one major change I applied as the concepts for our plans solidified and I knew we had a decent chance of achieving an earlier R-Date than envisaged, was that about 5 (maybe 6) years ago I decided to sell down some ISA investments each year so as to supplement reduced salary income (HRT payer benefitting from SS) allowing me to sacrificing the max down to NMW.

sho_me_da_money

sho_me_da_money said:

Awesome tacpot. 

Love that win and hope you are enjoying your retirement.

My story so far

I have a long thread on MSE where 2 years ago (age 40) i thought I had no pension pot. I later realised that I had a couple of them and consolidated them under one provider to produce a total pot of £30K. My goal was/is to retire as early as possible, which for me will be 57 years old.

.....so I started loading hard via my employers salary sacrifice scheme.

I am 42 years old next month and have a pension pot of £90K with an overall appreciation of approx 2% since starting. My biggest advantage (I think) was to load hard whilst the markets have been down due to COVID, Russia etc. My pot has gone from being in the red (minus) to flat (zero) appreciation over the past two years. This is the first month I have seen a positive of approx. 2%. As things slowly start to turn positive, I am hoping I see bigger gains in the forthcoming years.

Some of the things i did thanks to the advice of fellow MSE community members:

- Go from contributing £150 per month to contributing £2500 per month with a 5% contribution from my employer
- Changed my default pension products/investments to higher risk equity funds
- Went from three funds that focussed on EU, UK and USA to two higher risk funds that are focussed on USA and Emerging Markets

FYI, I have no wife or kids.
I have a 80 grand mortgage left on a property worth around 300K.
I have no savings to my name
I can afford to pay my debts, bills and have around 500 quid of disposable cash left each month.

Logged into my pension today and make that £93,723.45 with a 2.83% gain since April 2021.

Let's see how this story unfolds.

Bear777

My circumstances are as follows. I’m 47 years of age. I worked for about 10 years with a FTSE 100 company with a non contributory final salary pension scheme - nice! On reflection I probably shouldn’t have left them, however, I got a new job opportunity and 15 years later I am still there. Sadly the new job doesn’t have the non continuity pension lol!!

Well fast forward all those years and through all the twists and turns I have accumulated the following. 

My final salary pension scheme is working out that if I retire in 2041 at 67 then currently it will be worth £11.5k (increasing with rpi capped at 3% per annum). 

In 2008 I started contributing to my new stakeholder pension. My contributions were low enough at the start. Between my employer and I the contributions amounted to about £700 a month. By 2018 that amount had only increased per month to about £800 a month. 

Around Covid time I started to crank things up a little and upped my personal pension contributions and between myself and my company I started contributing about £1300 a month. About 2 years ago I made another big step change and increased my personal contributions so that my total contributions monthly were about £2250 a month where it has remained ever since. 

So in total the contributions to my pension from 2008 equate to £164k and the pension pot value as of today is £425k. So pretty good growth. To give that some reference in 2018 after 10 years I had contributed 82k and the pension was worth £164k. In the past 5 years I have added the same amount of contributions as I did in the first 10 years. So after 10yrs the growth was 100% on contribution. After 15 years the growth is 160% and the pot has grown by £260k in 5 years. I think the success of it is down to a number of factors some of which a lot of people in the investment world will disagree with, but have worked for me.

1. I monitor the performance of each of my funds (I have 6) on a weekly basis and have a massive spreadsheet that tracked the performance weekly and cumulatively over specific time periods. That allows me to analyse short term and long term performance.

2. I’m quite ruthless. If something isn’t working I tend to cut it and move on. I sometimes leave my existing money invested  there but stop contributing into it and ensure contributions are going into better performing funds. It’s a little like the frog analogy for me, stick it boiling water it jumps out, but stick in cold water and slowly boil it and it boils to death. That can happen when investing where people sleep walk into losses that only get bigger and bigger, now I have done it from time to time. But that only happens when I don’t track performance, when I don’t react, when I’m too sentimental and when I’m not ruthless enough. I’m massively better with this with my pension than I am with my ISA for some reason!! I can’t understand why (answers on a post card please).

3. I annually review the performance of all the funds (70 odd) within my pension wrapper to check I’m not missing anything that’s performing well or showing potential. 

4. I identified about 5yrs ago a couple of funds within my pension wrapper that were performing hugely better than others and I went all in. Probably not what was wise but it paid off. 

5. During and post Covid it was very clear to me that US funds bounced back much quicker and that’s where the money was going. So again like above, whilst not wise I went all in on a US fund that had always performed well for me and it paid off hugely, delivering great growth for me. I was getting something like £1k a week of growth for a couple of years. 

6. Luck - I de-risked at the right time after the market got too hot last summer, even then I still did get a bit burnt. I think from memory my fund value a year ago was about £450k so if you add in the fact I’m contributing about £27k per annum then the fund has dropped over £50k and at its worst that was closer to £75k. C’est la vie!

7. I’m slightly less obsessive about it all at the moment as the markets have been all over the place. But it’s started to grow again and I’ve clawed back £25k and oddly some of the capital protection funds that I went into are my worst performers so you just never really can tell what’s going to happen.

8. I’m no economist but I run businesses that are in the cold face of the economic world. We get hit before anything else, so I see spending patterns and it does allow me to see downturns happening before people or the world nearly wakens up to them. I’ve been doing this for 25yrs and track sales like I do funds and I can see the patterns and it allows me to make decisions around my investments that others may not see. 

I’m no expert but I do believe in form and I have years of info so can track the performance and can the trends better than just ignoring them. I think being cut throat, moving fast, contribution more where I can and being a bit ballsy at times have given me the growth I’ve achieved. 

Ultimately I’d probably like to retire or semi retire in the next 13yrs (good health allowing) when I’m about 60. I intend to maintain my contributions for that period and that alone will allow for another £350k to be invested.

So I hope to have a contributory pension pot of in excess of £1m assuming the world doesn’t have another melt down, which lets be honest is inevitable given the 10 to 12 yr cycle we seem to live in. I’ll also have my final salary pension and tbh if I semi-retire I may dip into it first as it doesn’t have any sibling or kids element built in so it dies with me. So, if I semi retire for 5yrs until my mid 60’s I may use it to top up my income and keep the big pot for later so I can try and pass as much of that onto my family when I finally pop my clogs!!  

Well that’s my story…so far ;-)

arthurdick

I was a very late starter with pensions(47)   I had no idea or interests in pensions most of my working life up until then, totally ignorant in that area.  Just over 15 years ago, our firm was taken back in-house by the local council, for the first few months I didn't even know that I was in a pension, I just got my wages and spent them, then 1 month I sat down and looked at my payslip and saw that I was contributing to a pension, then I remembered there was a site on the internet all about money stuff, (M.S,E).so I started to read the pension thread a little each week.  I kept reading stuff about LGPS, which I still didn't realise that I was in it, the I had another look at my payslip then it dawned on me that I was in this LGPS lark.

After about 4 more years, I was reading so much on this site( I followed Silvertabby's and a few more comments from other well known posters), which I found very helpful  and was worried that I was only going to have a tiny pension, so I started AVC's at £300 per month, which was quite a lot for me as I was on a very low wage, even when I took early retirement last year, i was still on less than 20grand p.a.. My exit target was 30grand in AVC's and a small pension per year, the AVC's helped me in taking max  pension with around 20% early retirement reduction.  To me, it was better to have my life with freedom to do what  I wanted when I wanted for the last 4 years up until SPA, I have around £5,000 per year pension and my lump sum from the AVC's to see me through. I love getting up early and walking up to Blackheath common to watch people rushing about going to work, then I go and sit by James Wolfe statue in Greenwich park, with a cup of tea, and sitting there looking at one of the best free views of London, with a smile on my face. 

Also, what make me have my small exit target, was reading stuff about qualifying for full SP.  By 2017 I had.   So after reading posts from Xylophone, I checked online at .GOV. 
So my little point is that it can be done  even if you start  a pension late in life, never too late to have free money form your employer.

sho_me_da_money

Bear777 said:https://forums.moneysavingexpert.com/discussion/comment/80069370

My circumstances are as follows. I’m 47 years of age. I worked for about 10 years with a FTSE 100 company with a non contributory final salary pension scheme - nice! On reflection I probably shouldn’t have left them, however, I got a new job opportunity and 15 years later I am still there. Sadly the new job doesn’t have the non continuity pension lol!!

Well fast forward all those years and through all the twists and turns I have accumulated the following. 

My final salary pension scheme is working out that if I retire in 2041 at 67 then currently it will be worth £11.5k (increasing with rpi capped at 3% per annum). 

In 2008 I started contributing to my new stakeholder pension. My contributions were low enough at the start. Between my employer and I the contributions amounted to about £700 a month. By 2018 that amount had only increased per month to about £800 a month. 

Around Covid time I started to crank things up a little and upped my personal pension contributions and between myself and my company I started contributing about £1300 a month. About 2 years ago I made another big step change and increased my personal contributions so that my total contributions monthly were about £2250 a month where it has remained ever since. 

So in total the contributions to my pension from 2008 equate to £164k and the pension pot value as of today is £425k. So pretty good growth. To give that some reference in 2018 after 10 years I had contributed 82k and the pension was worth £164k. In the past 5 years I have added the same amount of contributions as I did in the first 10 years. So after 10yrs the growth was 100% on contribution. After 15 years the growth is 160% and the pot has grown by £260k in 5 years. I think the success of it is down to a number of factors some of which a lot of people in the investment world will disagree with, but have worked for me.

1. I monitor the performance of each of my funds (I have 6) on a weekly basis and have a massive spreadsheet that tracked the performance weekly and cumulatively over specific time periods. That allows me to analyse short term and long term performance.

2. I’m quite ruthless. If something isn’t working I tend to cut it and move on. I sometimes leave my existing money invested  there but stop contributing into it and ensure contributions are going into better performing funds. It’s a little like the frog analogy for me, stick it boiling water it jumps out, but stick in cold water and slowly boil it and it boils to death. That can happen when investing where people sleep walk into losses that only get bigger and bigger, now I have done it from time to time. But that only happens when I don’t track performance, when I don’t react, when I’m too sentimental and when I’m not ruthless enough. I’m massively better with this with my pension than I am with my ISA for some reason!! I can’t understand why (answers on a post card please).

3. I annually review the performance of all the funds (70 odd) within my pension wrapper to check I’m not missing anything that’s performing well or showing potential. 

4. I identified about 5yrs ago a couple of funds within my pension wrapper that were performing hugely better than others and I went all in. Probably not what was wise but it paid off. 

5. During and post Covid it was very clear to me that US funds bounced back much quicker and that’s where the money was going. So again like above, whilst not wise I went all in on a US fund that had always performed well for me and it paid off hugely, delivering great growth for me. I was getting something like £1k a week of growth for a couple of years. 

6. Luck - I de-risked at the right time after the market got too hot last summer, even then I still did get a bit burnt. I think from memory my fund value a year ago was about £450k so if you add in the fact I’m contributing about £27k per annum then the fund has dropped over £50k and at its worst that was closer to £75k. C’est la vie!

7. I’m slightly less obsessive about it all at the moment as the markets have been all over the place. But it’s started to grow again and I’ve clawed back £25k and oddly some of the capital protection funds that I went into are my worst performers so you just never really can tell what’s going to happen.

8. I’m no economist but I run businesses that are in the cold face of the economic world. We get hit before anything else, so I see spending patterns and it does allow me to see downturns happening before people or the world nearly wakens up to them. I’ve been doing this for 25yrs and track sales like I do funds and I can see the patterns and it allows me to make decisions around my investments that others may not see. 

I’m no expert but I do believe in form and I have years of info so can track the performance and can the trends better than just ignoring them. I think being cut throat, moving fast, contribution more where I can and being a bit ballsy at times have given me the growth I’ve achieved. 

Ultimately I’d probably like to retire or semi retire in the next 13yrs (good health allowing) when I’m about 60. I intend to maintain my contributions for that period and that alone will allow for another £350k to be invested.

So I hope to have a contributory pension pot of in excess of £1m assuming the world doesn’t have another melt down, which lets be honest is inevitable given the 10 to 12 yr cycle we seem to live in. I’ll also have my final salary pension and tbh if I semi-retire I may dip into it first as it doesn’t have any sibling or kids element built in so it dies with me. So, if I semi retire for 5yrs until my mid 60’s I may use it to top up my income and keep the big pot for later so I can try and pass as much of that onto my family when I finally pop my clogs!!  

Well that’s my story…so far ;-)

Thanks to this note, I decided to review the performance of the funds i was invested. I paid close attention to the numbers over the span of 5 years.

My investments were split as follows:

75% - L&G PMC HSBC Islamic Global Equity Index Fund 3
25% - L&G MT Emerging Markets Index Fund

However, upon further inspection of the Emerging Markets Fund, the performance was pretty crap compared to all the other equity funds available to me.

I have now changed my allocations as follows:

50% - L&G PMC HSBC Islamic Global Equity Index Fund 3
50% - L&G PMC World (ex UK) Equity Index Fund 3

These are the two top performing funds available to me.

Lets see how we get on.