Success Stories - Pensions

MetaPhysical

All these success stories go to show the importance of saving into your pension from when you are young and almost a lifetime away from retiring.  Very few are from people who started past 40.  Why don't they teach this stuff at school??????   I am 56 and every time I speak with younger colleagues I explain to them, in a none patronising way the criticality of pension saving, especially since very few of them will have a DB pension and that that the SP will probably almost certainly be gone or heavily means tested in 40/50 years.  You can't put older heads on younger shoulders though.

MetaPhysical

barnstar2077 said:

darich said:

Got my first job at a local authority way back in 1990 when I was just out of school.

A few weeks later, someone put a form in front of me and told me to join the pension scheme. So I did.

Started off on a final salary pension paying 1/80th of my salary. Then it changed to average salary and the contribution also changed to 1/60th of my salary. A few years later it changed again to 1/49th of my salary.

I also started paying into my AVC pot in 2016 with around £50 per month. I’ve gradually increased that and it’s now a regular £200 per month although this year, I’m working on a site and getting a load of overtime so while treating myself to some goodies (like a BMW Z4 coupe and a load more camera gear), I’ve massively increased my AVC contributions this year, with several deposits of £500 and two of £900.

I’m currently 51 and based on projections to age 60, I’m projected to have a pension of £25k and 30k lump sum, along with 100k lump sum from my AVC pot.

My AVC pot is currently worth just under 20k with my contribution being under 15k, but with the tax benefit it’s cost me under 12k. So that’s a benefit of almost 60%.

My mortgage is just over 44k with 6 years to go, 5 of which are on a fixed rate of 2.49%. I’m fully expecting to pay it off when my fix ends and then I’ll increase my AVC payments by around £400 per month. So my AVC could well be higher than the current projection.

I’m fully expecting to retire at age 60 based on the above numbers.

You have done great!  So well in fact that I would be tempted to retire earlier if you can.  What would you get at 57 for instance?  (I assume you will have qualified for a full state pension by then?)

Is it possible for you to not have a lump sum from the final salary and take an increased yearly amount?

You could also subsidise your reduced final salary with your AVC pot until your state pension kicks in.

My mum passed away at sixty nine, having only fully retired the year before.  I would love to be able to look back now knowing that she retired earlier and enjoyed life a bit before the off.

barnstar2077 said:

darich said:

Got my first job at a local authority way back in 1990 when I was just out of school.

A few weeks later, someone put a form in front of me and told me to join the pension scheme. So I did.

Started off on a final salary pension paying 1/80th of my salary. Then it changed to average salary and the contribution also changed to 1/60th of my salary. A few years later it changed again to 1/49th of my salary.

I also started paying into my AVC pot in 2016 with around £50 per month. I’ve gradually increased that and it’s now a regular £200 per month although this year, I’m working on a site and getting a load of overtime so while treating myself to some goodies (like a BMW Z4 coupe and a load more camera gear), I’ve massively increased my AVC contributions this year, with several deposits of £500 and two of £900.

I’m currently 51 and based on projections to age 60, I’m projected to have a pension of £25k and 30k lump sum, along with 100k lump sum from my AVC pot.

My AVC pot is currently worth just under 20k with my contribution being under 15k, but with the tax benefit it’s cost me under 12k. So that’s a benefit of almost 60%.

My mortgage is just over 44k with 6 years to go, 5 of which are on a fixed rate of 2.49%. I’m fully expecting to pay it off when my fix ends and then I’ll increase my AVC payments by around £400 per month. So my AVC could well be higher than the current projection.

I’m fully expecting to retire at age 60 based on the above numbers.

You have done great!  So well in fact that I would be tempted to retire earlier if you can.  What would you get at 57 for instance?  (I assume you will have qualified for a full state pension by then?)

Is it possible for you to not have a lump sum from the final salary and take an increased yearly amount?

You could also subsidise your reduced final salary with your AVC pot until your state pension kicks in.

My mum passed away at sixty nine, having only fully retired the year before.  I would love to be able to look back now knowing that she retired earlier and enjoyed life a bit before the off.

Totally agree.  Also @darich sounds a pretty active type of guy.  I'd encourage him to maintain that when he retires.

@barnstar2077 Sorry to hear about your mum only having retired a year before she died, that sucks.  I am hoping that, god willing, when I retire at 58 (18 months away) I will have much more time for fitness, hiking, dancing with my wife, gym and other physical pursuits.  My current IT sales job is very sedentary and boy do the pounds pile on if I am not VERY careful.  Retirement will help me with this.

BudgetSBertie

Nice to read these stories. My story isn't very exciting. 

I'm 52 and really enjoy my job so no plans to retire just yet- although starting to cut down the hours.

I've never had the chance to join a DB pension scheme. I started pension saving at 27 when my employer at the time set up a DC scheme. Aged 34, I got an unexpectedly large bonus (20%- not mega city levels) and, with no plans for the money, decided to put it into my pension. HR messed up and paid me instead of the pension so I opted to salary sacrifice it over the following year instead (26% contriibution instead of usual 6%. Employer added 10% and saved employer NI too). The next year, I got a pay rise and still had some of that bonus money left so didn't bother changing my contribution level and a good saving habit was born.

I mainly invest in cheap tracker funds and don't do anything much except maintain my regular contributions. My pot fluctuates (I've learnt not to watch it too much) and currently stands at c£800k. My ability to maintaiin contributions has been because of luck (continued good salary, houses were cheaper when I bought etc) and some sensible choices (e.g. opting for inexpensive 2nd hand cars). I've a good life and am happy with my save-spend balance. 

FIREDreamer

BudgetSBertie said:

Nice to read these stories. My story isn't very exciting. 

I'm 52 and really enjoy my job so no plans to retire just yet- although starting to cut down the hours.

I've never had the chance to join a DB pension scheme. I started pension saving at 27 when my employer at the time set up a DC scheme. Aged 34, I got an unexpectedly large bonus (20%- not mega city levels) and, with no plans for the money, decided to put it into my pension. HR messed up and paid me instead of the pension so I opted to salary sacrifice it over the following year instead (26% contriibution instead of usual 6%. Employer added 10% and saved employer NI too). The next year, I got a pay rise and still had some of that bonus money left so didn't bother changing my contribution level and a good saving habit was born.

I mainly invest in cheap tracker funds and don't do anything much except maintain my regular contributions. My pot fluctuates (I've learnt not to watch it too much) and currently stands at c£800k. My ability to maintaiin contributions has been because of luck (continued good salary, houses were cheaper when I bought etc) and some sensible choices (e.g. opting for inexpensive 2nd hand cars). I've a good life and am happy with my save-spend balance. 

That’s excellent at 52!

UrbanAchiever

MetaPhysical said:

All these success stories go to show the importance of saving into your pension from when you are young and almost a lifetime away from retiring.  Very few are from people who started past 40.  Why don't they teach this stuff at school??????   I am 56 and every time I speak with younger colleagues I explain to them, in a none patronising way the criticality of pension saving, especially since very few of them will have a DB pension and that that the SP will probably almost certainly be gone or heavily means tested in 40/50 years.  You can't put older heads on younger shoulders though.

Totally agree.  I started young and it's going to pay off via an early retirement (age 53 earliest or age 55 latest - depending on when my kids are done with Uni).  Seeing this work for me, I started SIPPs for both my kids.  Will take some pressure off them in the years when they need to pay a mortgage/bring a family up.  I've also started JISAs for them to help with deposits for houses etc.

mighty2022

UrbanAchiever said:

MetaPhysical said:

All these success stories go to show the importance of saving into your pension from when you are young and almost a lifetime away from retiring.  Very few are from people who started past 40.  Why don't they teach this stuff at school??????   I am 56 and every time I speak with younger colleagues I explain to them, in a none patronising way the criticality of pension saving, especially since very few of them will have a DB pension and that that the SP will probably almost certainly be gone or heavily means tested in 40/50 years.  You can't put older heads on younger shoulders though.

Totally agree.  I started young and it's going to pay off via an early retirement (age 53 earliest or age 55 latest - depending on when my kids are done with Uni).  Seeing this work for me, I started SIPPs for both my kids.  Will take some pressure off them in the years when they need to pay a mortgage/bring a family up.  I've also started JISAs for them to help with deposits for houses etc.

MetaPhysical said:

All these success stories go to show the importance of saving into your pension from when you are young and almost a lifetime away from retiring.  Very few are from people who started past 40.  Why don't they teach this stuff at school??????   I am 56 and every time I speak with younger colleagues I explain to them, in a none patronising way the criticality of pension saving, especially since very few of them will have a DB pension and that that the SP will probably almost certainly be gone or heavily means tested in 40/50 years.  You can't put older heads on younger shoulders though.

@MetaPhysical @UrbanAchiever I've been following this thread with great interest. I am at the opposite end compared to everyone on here. Due to turn 32 in March and its only really over the past 2 years that I've started taking notice of my pension. Like most people in mid 20s to mid-30s, I've previously just opted into pension at the lowest possible EE/ER contribution (and at one point for about 8 months, I opted out of everything including NEST!)

I currently have:

- 45k in my current active DC pension (6% EE and 12% ER contributions)

- 32k in my previous employer's DC pension.

My wife also has several pensions: 

- current active DC at 8k (5% EE / 5% ER), 

- 20k + 1.2k in 2 previous employers' DC pensions and 

- local council DB pension which the last statement said was worth 1200 per year but i could be wrong. (I don't understand how DB pension work tbh but I know they far better than DCs) 

I've had some great mentors in my current workplace, most of have retired in the last few years and they have practically drilled in the importance of pension especially, the "early, the better". Which is why we've decided for the tax year 24/25, I will put an extra 17% on top of the 6% as AVC (so 23% EE contribution in total) into my pension. Our idea is that this will have longer time to grow as opposite to doing this at the age of 45-50. We will attempt this again in another tax year with similar contribution in around 2028 - 2030.

We obviously still have mortgage/bills to pay so for the salary that we lose by adding 17% AVC, we will make this up by dipping into our savings which we've built up to a decent amount.

And lastly, we have a baby on the way, so we have plans to open a SIPP and a JISA and invest into a low cost index tracker fund. 

Reading other's stories have kept us motivated and has been inspriational!

MetaPhysical

They say as a rule you should save in percentage terms a minimum of half of your age - so in your case 16%.  That's in total including your employer's contribution and tax relief.  16% of your gross should be hitting your pot per year to have a good sum at the end.  It is imperative the money starts early so it has time - decades - to compound.

DT2001

So many excellent tales of good long term pension planning. Our journey is by comparison, I think, rather haphazard. 

I have a DB pension drawn at 50 and now £9k which at 65 (2 years time) will be all GMP with half not increasing and half increasing by CPI. This was taken early partly as the fund had a shortfall and partly as I wasn’t expecting to pay any/much tax being a stay at home Dad with a little self employed income. In the last 20+ years I have been involved in two companies, from one receiving small dividends and the other just one payment (a large bonus on the successful sale of the business). The bonus funded 90% of my SIPP (£300k).

OH has two DB’s to draw at 60 totalling £4.5k. She has been self employed for the last 30 years and until 5 years ago had under £50k in her pension. We have heavily funded it in last 5 years from a combination of savings (partly put aside to fund university for eldest two which wasn’t needed), bumper earnings and a small inheritance. Her fund has now topped mine.

We have ISA’s (mostly funded from years ago - mine from SAYE scheme that I luckily encashed a few years before 2008 credit crisis) worth £400k+ and a property in a low level ski resort.

 I think we have been lucky but as we live (exc travel which varies with our income ) on about a 1/3 of our projected income at SPA. the savings mentality we have both had from a young age has served us well.

Our children have a better understanding already of pension/ISA’s than we did. They also had a pension started a birth by their grandma with £3.6k and other ‘bits and bobs’ investments. Our eldest who has just completed his apprenticeship, is self employed, and putting away money into a pension and ISA - so off to a good start aided by no rent. Education is vital from schools and parents as shown by the outcomes above.

richieo

I thought I was doing really well until I read some of the stories on here!  Now I think I’m doing pretty well!

I’m 42 and started in my current role back in 2005.  I didn’t start paying into the pension immediately but have been contributing regularly since 2006/07.  My previous job was with the civil service and transferring the pension didn’t seem worthwhile at the time so I took the cash (only £600) and used it to buy a suit.  It’s a great suit which I still have and I don’t regret that decision.

I only started taking a real interest in my current pension back in 2018.  I was surprised at that time how much I had saved, but I’ve since realised that it was invested quite conservatively and I missed out on a number of years of serious growth.

I’ve since taken some financial advice and have it invested in a mix of BlackRock, Vanguard, JP Morgan, Standard Life and SJPP funds, mostly US equity, but I am trying to diversify that a little.  Current pension pot is £182,000 of which £42,000 is investment growth.  I’m now starting to see some good investment growth and am hoping that paying into growth funds during the relatively slack period from 2020 onwards will really start to pay off in the next few years.

I’m putting in £1,330 a month of which about 2/3 is employer contributions.  My employer contributions ratchet up at 5 year intervals so that will help my pot grow more than currently predicted when I get to 45 and 50.

Adding in my wife’s pension I am hoping I can retire at 60 but we will see how we go. 

1980ds

richieo said:

I thought I was doing really well until I read some of the stories on here!  Now I think I’m doing pretty well!

I’m 42 and started in my current role back in 2005.  I didn’t start paying into the pension immediately but have been contributing regularly since 2006/07.  My previous job was with the civil service and transferring the pension didn’t seem worthwhile at the time so I took the cash (only £600) and used it to buy a suit.  It’s a great suit which I still have and I don’t regret that decision.

I only started taking a real interest in my current pension back in 2018.  I was surprised at that time how much I had saved, but I’ve since realised that it was invested quite conservatively and I missed out on a number of years of serious growth.

I’ve since taken some financial advice and have it invested in a mix of BlackRock, Vanguard, JP Morgan, Standard Life and SJPP funds, mostly US equity, but I am trying to diversify that a little.  Current pension pot is £182,000 of which £42,000 is investment growth.  I’m now starting to see some good investment growth and am hoping that paying into growth funds during the relatively slack period from 2020 onwards will really start to pay off in the next few years.

I’m putting in £1,330 a month of which about 2/3 is employer contributions.  My employer contributions ratchet up at 5 year intervals so that will help my pot grow more than currently predicted when I get to 45 and 50.

Adding in my wife’s pension I am hoping I can retire at 60 but we will see how we go. 

This sounds very similar to whereabouts I have got to. 

43 years old but really only took pensions seriously in last 7/8 years as needed every penny to travel in mid 20s, repay student loans, get 10% deposit for 1st house, kids, etc etc.

Current DC pension at 350k with 50k investment growth (so yours sounds better performing).  

Last few years I have been in a lucky position to max out pension contributions, plus the 62% marginal tax pains me. Plan is to max out for 2 years and hopefully get pot to 500-550k figure and then pull contributions back to circa 16-18k per year.  Thought is that with investment growth, the pot will grow to c£1m by mid-50s and look to retire or reduce workload from 55 years old.

i do often think you just don’t know what’s round the corner though so want to max pension out whilst I can!