Success Stories - Pensions

MallyGirl

When I first found MSE I was a 'mortgage free wannabe'. I had bought my first flat with an endowment mortgage at 17% so there were good historical reasons for this mindset. My first job had a final salary pension but I was under 25 for most of it so it will pay about £3k per year at age 60 - everything else is DC.
I always contributed enough to get the max employer contribution and I took out a personal pension when I joined a company that didn't offer one - but I never put in more than the basic.

We did pay off the mortgage but then made one more big move. We had an offset mortgage so I had always made active use of 0% cards/stoozing to save on mortgage interest.

Coming up towards 50 I started to look at our overall finances more - with a view to retiring early. OH had always paid more into his pension and he had stayed with the company that didn't offer a pension for a lot longer so he had a much bigger personal pension pot than me (with all mine combined). He had also chosen higher risk investments. We stopped overpaying the mortgage and instead used it to fund much more significant sal sac contributions to both our pensions. We also started putting money into S&S ISAs. We then switched to a 5 yr fixed rate mortgage (1.16%) at just the right time which should see us through to retirement at 59 - the balance will be covered from PCLS before the rate goes up.

OH was likely to hit LTA so he crystallised some at 55 which now seems to have been unnecessary but it was the perceived wisdom at the time. The cash liberated is in premium bonds and savings accounts which offer reasonable interest albeit far below inflation.

I wish I had switched on to the pension a bit earlier but we are doing fine now. I wish I had looked more closely at the sun life of Canada personal pension I took out - the fees were pretty high - but the MD of the company had a FA mate who came in and signed up lots of us. It was still better than doing nothing.

oap71

Mine is not a success story, I'm 70 claiming a pension however my wife is only 64 and is not of pensionable age , so we're not eligible for pension credit.

Moonwolf

I started working part time jobs after university and couldn't join the pension schemes.  Eventually I had an opportunity to start work full time in NHS IT and data (this is the late 80s so it was very different to today - even the NHS) so was enrolled in the 1995 scheme.  

After a few years (about 2-3) I decided to add in a free standing AVC and took one out with Allied Dunbar, at the time I didn't know much about pensions, just that as my partner is older than me I wanted to retire earlier so paying more seemed sensible. The plan was to stop if we had children, but our only daughter died so I carried on.

After 10 years I moved to a private sector IT company as a travelling IT consultant, they matched payments into a private pension so I just fell into taking mine out with Allied Dunbar.  After 2 years that company was taken over by one that offered a final salary DB scheme so obviously I joined that.  As I had only had my Allied Dunbar pension for two years and charges were front weighted I expected to lose most of it.

I didn't actually realise the advisor hadn't closed the pension and was keeping it going by claiming SERPS.  I didn't receive any paperwork or tax notes until after Zurich took over.  I did try a complaint but in the end didn't chase it up, I've no idea if I lost out although I do know I paid a lot more in fees than I should have.

I moved to BT Global Services, and joined their DC scheme, I also transferred in my Allied Dunbar pensions into that and just kept upping my payments with most of every pay rise and with BT matching the first 9% in those days. By the end 30% of my salary was going into pension.  

I was then TUPEd to the NHS along with the service I was working on where I had to join the 2015 scheme (I actually have £60 a year in the 2008 scheme which I hope to take a trivial commutation).  I have continued to pay into the old BT pot and I have also been managing the funds more closely, learning more about pensions and then adding more information learned from here.

I am now  57. I have 3 DB schemes which by the time I am 65 will pay £20K a year (not including additional pension earned on the current one), a full new state pension of £10K.  My DC pot from all the above is worth about £300,000, and I think to get that I have paid in about £50,000 of my own money (discounting employers contributions, tax and investment growth).  

I am now in the situation where I can retire when I want, it is just each extra year reduces risk and makes retirement a bit more comfortable. I am about 2 years from my "relaxed" budget. (for me relaxed is going into a bookshop or even a weekend away without budgeting but not a big holiday or a car)

Even when I was making bad decisions and not watching things properly, the fact that I was saving more money was always better than not, although slightly more open eyes and I might be even better off.

L9XSS

Like a previous poster I joined MSE primarily to focus on paying off my mortgage early. I was active on the “ Mortgage free wannabe” forum. I’d always seen the goal for financial freedom as clearing my biggest debt as quickly as possible having taken on a 25 year term mortgage in 2008. I hadn’t paid too much attention to pensions previously having been happy with company pension schemes I joined through my workplace career. I’m fortunate to have a DB pension that is forecasted around 20k pa from age 60 with staggered CPI increments yearly. When I left this employer and started a new senior role I was able to pay 10% contribution into a DC scheme with a 15% employer contribution. After 5 years I’d built up a DC pot of about 130k. Once the mortgage was clear, it was paid off 11 years early I really focussed on my SIPP. In the latter stages I overpaid mortgage and added to my SIPP (so a bit off both). I had been “lucky” with the DC growth and hadn’t realised the true value of my DB pension having initially looked at transfer out and getting advice on this forum. The highest CETV was £565k which was tempting when the doors to transferring a DB pension were a little easier than now. I’m so glad that I took advice from many seasoned posters that the CETV was low for the income given up. I believe I would need a DC pot of around 1.4million to be able to achieve the pension income I’m looking at from 62 years of age, I’m modelling around 38k to 42k. The DB pension will do all the heavy lifting followed by a 200k SIPP and some limited ISA money plus the SP at 67.
Probably more luck than good management but this forum and MSE in general has helped build my pension knowledge. I’m now trying to help friends and family of different age groups understand pensions and FIRE.

Brricktop69

I'm not sure if it constitutes a success but I have a DC pension pot of £230k, i'm now 54 years old and have recently upped my contributions to £1500 a month, (this includes my employer contribution). In another few months i will be in a position to increase by another £500 a month.
In an ideal world i'd like to retire when i'm 62 so i'm looking at another 8 years to go.

I think the key advise I would give anyone is once you have an emergency fund in place get as much as possible into your pension.

Yankee24

Dual income family, with me as the primary earner, in an old style DB scheme.  I contributed additionally to the scheme as I didn’t really understand a DB scheme at age 25!   

1.  As I grew older and earned more, I upped my contributions to keep myself out of the higher rate tax bracket as much as limits allow.  
2.  Every pay rise, I split between take home pay and pension.  

3.  We always used an IFA.  It kept us from frittering ( accountability,  as my husband finds money boring)
4.   Husband had many DC schemes…. We consolidated them for ease and once kids were at uni, all spare money went into his pension. 

Then, my parents died. Both were 80, but in quick succession.  They lived in the USA, so I inherited the rest of their DC pots….  Why is this important?   Because at age 50, hubby and I were already set with retirement income and had enough for 50k a year at age 50.   We took this inherited money, paid off the kids student loans, gave them each money for house deposits and pay for them to use our IFA.   We approach retirement with a clean slate, no need to preserve inheritance….    Interestingly, we may not go at 55 now… whilst I have never loved my job, I am good at it.  And it pays well. And my husband’s challenge is, are we not doing anything because we work still?   Nope.  We travel a lot, have hobbies and are enjoying life. 

kinger101

Neither a success nor failure at the moment, but my story is as follows

+ didn't really start pension until mid 20s (as studied PhD)
+ first job in taxation - DC scheme but relatively low ee and er contribution placed into a really bad and expensive scheme which should have been an embarrassment to one of the big five accountancy firms as it was then (I moved this into a SIPP in the end).
+ went to work in USA for almost three years as a postdoc.  A dismal scheme in which the miserly 3% er contribution was clawed back if you left within 3 years (i.e. before my visa expired).  I opted out as essentially, no free money.  Don't regret it.  It would have been more effort than it was worth.
+ returned to UK in early 30s.  Was then in USS DB scheme for 11 years.  It ain't that it used to be, but it will be a solid foundation covering the basics when I factor in SP.  My main concern with USS is the inflation risk.  I did make some modest contributions to a SIPP during the period (as I was concerned about the 3 years is USA with no pension).  In hindsight, it would have been better to wait until I paid HR tax, but no regrets (other than the rookie mistakes).
+ Mid 40s moved to private sector.  Salary grew rapidly via a series of promotions.  Employer match is decent, but I've gradually ramped up my pension contributions considerably, giving careful consideration to the tax efficiency.

I've certainly benefited from what I've read on on this forum, mainly by just reading the posts.  My investments are now pretty much all global ETFs to lower the cost (I spent far to long being fleeced for holding OEICs).  I'm comfortable being 100% equities given the DB pension.  Though I do hold some cash in ISAs. 

Ideally, I'd like to retire around 60, and that might well be achievable if my employment remains stable. That I realize is not certain, so I'll just make hay while the sun is shining.  This is partly because no job is 100% stable, and it would be difficult for me to command the same salary in my rather niche role elsewhere.  And partly because I don't really like many aspects of my current job, and have been asking myself if working for longer in a lower paid job might be better for me and my family.  Quite simply, I think Archer might have had a point about doing his time in a matchbox.

Who knows where I'll be at 60, 65 or 67.  But I'm glad I'm at least giving it more thought than the average person, and if I am fortunate enough to retire early, I can tell myself planning was some part of it (though I'll take all the luck I can get).

older_and_no_wiser

tacpot12 said:

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. 

Great story. Do you manage to fill your days in? I'm in a similar position with pensions etc and currently 54 yo. I could retire next year once I have SIPP access at 55 but I'm not sure I would get much fulfillment and I quite enjoy working. 

El_Torro

I started my current job at the age of 34, with a pension pot of £30k. I decided that if I want to retire significantly before state pension age I would have to up my contributions significantly. Until that point I had pretty much ignored what my pension was invested in too, so started taking a more active interest in that. 

Nine years later I now have a pension pot of about £280k. Some of that has been due to growth, a lot of it has been due to the contributions I have made in the last 9 years. 

I’m still contributing a healthy amount to my pension, though have recently been focusing on topping up my ISAs as much as I can too. I’ll need a healthy balance in my S&S ISA to give me the flexibility to retire when I want. 

I’m not sure exactly when I’m going to retire, probably by the time I’m 60. The idea is to be financially independent as soon as possible though.

Simon11

I have always taken advantage of pensions but didn't show much interest or put anything extra into the pot.

My first success was to have a part-time job from a young age earning several £thousands p.a. going to around £8k p.a. around age of 18 while at university, so as well as earning tax free income from the age of 14/15, I was also earning the important NI contributions (although I had no clue at the time).

In my early 20s, my second success was to purchase a flat using the money saved up from my first success which is now a B2L and once HS2 opens, I hope to see substantial increases like the ones seen near Crossrail stations. 

Then around two years ago, we moved into our family house and after settling have started to throw more into the pension and took a more active role on pensions (maybe too much now!).

At the age of 34, I now have a pension pot worth £148k. Looking back, it was only worth £85k 20 months ago, so have funneled a huge amount without impacting on our lifestyle and quality of life (mostly thanks to savings in tax).

Thanks to a few job hopping years in my early 20's (my third success), I am now in a very 'cushy job' with a benefit plan that can't be beaten in my industry (plus with limited responsibilities, limited management of junior colleagues, huge amount of annual leave and only really work 20-30 hour a week mostly from home) and so the current plan is to stick with my existing job as long as I can taking as much advantage as I can (currently taking full advantage of shared paternal leave of getting 16 weeks fully paid)!  Please don't tell my boss!!!! 

My current plan is to retire at the age of 50, and over the last two years have taken more thought about what I intend to do. My plan is to find an enjoyable stress free part-time low wage summer job and then take lots of holidays over the winter period, with the sale of the B2L topping up any income gaps. Then likely to stop working around 60 and tap into private pensions until getting the full state pension.

Career, savings and investment are quite like rolling a snowball down a mountain, quickly gaining speed!


What is however a shame is that none my of friends/ colleagues appear to pay any attention to pensions and if they keep going, they will be working a very long time unless they have that light bulb moment. Well worth thinking sometimes about the future, rather than today.