Success Stories - Pensions

monkey-fingers

I'm a bit more "in the middle" right now.
Firstly, my first pension in 1998 for 9 months.
I opted out of SERPs. I paid in just £233. My work contributed £998.

It's currently worth £16,000.

If you ever want to show young people how pensions work, this is a perfect example.

I then joined my companies DB scheme. People will tell you how wonderful they are and how much they'll be worth. I paid in 7.5% of my salary for 12 years and I'll get just £5k a year out of it if and when I retire in 11 years time. The transfer value of it in 2010 was around £200,000. It's now worth just £105,000 - if you understand pensions, you'll know why (I had to get an IFA to explain it to me).

If I'd taken the £200k in 2010 and put it into a regular SIPP, it would now be worth around £500k. Based on the 4% take out, that would have been worth £20k a year today, more in 11 years time.

Poor judgement, based on people screaming at me not to cash in my DB pension (including on here).
If I'd done that, I would be retiring on my 55th Birthday.

Since then, I've had a contributory based pension. My work increased their payments to make up for removing the DB pension. I've been paying in 9% a year since.

The pension hasn't really performed as well as I'd hoped, but I was made redundant after 29 years at the same company last year. I took the maximum tax free amount (new rainy day fund) and put £60k into my pension.

I'm now working for myself and I'm flooding my pension. At the moment, £4k a month, but will probably increase that to £5k a month. As you can imagine, the more I pay into my pension, the less corporation tax and dividend tax I pay. I'm actually paying myself less than my previous PAYE job, because I'm aggressively aiming to retire at 60.

I'll still have around £100k in mortgage, so I'll be taking that out (I know what you'll say, but the payments are crippling, because I only started it at 49 and aimed to pay off by 67). Once all is done, I should have around £2.5k a month take home without touching the DB. My calculations are based on hitting my main pension for 5 years, then it goes down with the DB kicking in at 65, then (with luck) my State Pension topping up.

If it all goes a bit skewy, like the above poster, we hit lucky with our house. All we did to our last one was some slap and tickle and between 2020 and 2022 we made 50%. Moved down to the New Forest, bought another one that needed some slap and tickle and it's worth roughly 50% more than we paid for it (based on our neighbours recent sales).

So if we downsize (which we might - we currently have a 3 bed detached bungalow with a very decent garden), it'll give us a few more years. We have also made it clear to my kids that it's unlikely there'll be much left, particularly if we end up in a home.