Success Stories - Pensions

Cus

I got lucky, my first proper job back in the 90's after university had me auto enrolled in a final salary scheme. The company closed it to new members a few months later, and completely closed it after 8 years and so was put into a default DC pension. Moved jobs a bit many years later, noticed this salary sacrifice thing on payslips, looked into the world of pensions. 
Did a transfer of the final salary pension in 2017 and brought  the other workplace DC pots together then made sure I put in as much as possible in the following years.
With some good growth it's now quite a bit more than the old LTA.  
Friends of mine of similar age are sleepwalking into a shock in retirement unfortunately.

Will_Do

I'm 57 and have been paying into one pension or another since I was twenty with only a 3 year break when I took time out to go back to higher education and could only work part time.

I've currently got:

• A small index-linked DB pension that pays out approximately 5k PA from age sixty.
• A SIPP that was funded by transferring out from my previous employer's workplace DC scheme. Currently sitting at £450k from an initial £384k 18 months ago - just investment growth, no additional contributions, which I'm very pleased with.
• Current workplace DC pension with £26k in it and presently contributing 25% between EE and ER on an 80k salary.
• My wife and I both have full state pension entitlement which she gets in 6 years and I in 10.
• £40k in savings.

My wife has recently retired but she only ever worked part-time on a low wage and my salary went up by a similar amount when I changed employers. I once had an ambition to retire at 60 but I took a 3 month break between previous and current employer and realised that there are too many hours in the day, for me at least, with no work to do. So I'm now happy to keep going a bit longer. 63 looks like a possible candidate, due to my wife getting her state pension, but if I need to work on longer I'm not fussed.

I feel reasonably comfortable with our outlook but very conscious about just how much is required for a comfortable retirement and the very real potential for investments to go down as well as up.

I'm glad I started fairly early and made additional contributions for a large part of it. When you're young, retirement can seem so far away in the future that it almost doesn't seem worth worrying about. Your older self will thank you though for taking it seriously and the longer you put off saving for retirement the harder it is to catch up. 

Ellierose

I’m 44 and had had a non contribution DB pension from Barclays when I left in 2004 which thanks to the main posters on this site I started showing an interest in how it works. I began reviewing Gilt yields v transfer value over the last few years as Gilt yields declined my transfer value increased from 38k to 276k. I sought abridged advice and managed to transfer at the peak in Feb 2022 and have now built to £400k. Had it not been for this site I would be retiring in 16 years @ 60 with an 4k indexed linked DB pension, but now I’m hoping to retire @ 57 with 15k drawdown yearly. I feel blessed having found this forum and despite being warned by many 2 years ago not to transfer from DB scheme I can honestly say it’s the best money decision I’ve ever made and my timing to transfer was perfect. 

Askfirst

Am I not right in thinking it would have been more than £4k pa by the time you retired? Nevertheless that is a staggering multiplier.

FIREDreamer

Ellierose said:

I’m 44 and had had a non contribution DB pension from Barclays when I left in 2004 which thanks to the main posters on this site I started showing an interest in how it works. I began reviewing Gilt yields v transfer value over the last few years as Gilt yields declined my transfer value increased from 38k to 276k. I sought abridged advice and managed to transfer at the peak in Feb 2022 and have now built to £400k. Had it not been for this site I would be retiring in 16 years @ 60 with an 4k indexed linked DB pension, but now I’m hoping to retire @ 57 with 15k drawdown yearly. I feel blessed having found this forum and despite being warned by many 2 years ago not to transfer from DB scheme I can honestly say it’s the best money decision I’ve ever made and my timing to transfer was perfect. 

Askfirst said:

Am I not right in thinking it would have been more than £4k pa by the time you retired? Nevertheless that is a staggering multiplier.

Could even be £8k today, with statutory revaluation, if it was £4k when deferred 20 years ago?

Makes the multiplier in 2002 much more realistic.

Ellierose

Brief details of helps other when deciding if DB transfer is viable. I’d think not unless transfer values go back to 2022 levels. My differed pension was 2850 per annum in 2004 when I left and 4000 when I transferred to my work stakeholder account 2 years ago. Max inflation increase per year was 5% so with same 20 years would have been 6500 by 66 & 9000 by 88. My circumstances are such that I lost my dad to cancer at 60 so another consideration was db scheme NRD was 60 so can now retire in 10 years. Instead of 15. Hopeful pot will be 500k by then so I can draw 4% per year which will be 3 x my DB scheme and if I die my spouse gets 100% of 500k instead of 50% of £6000 index linked per year till she dies then kids get nothing

MEL1981

Love this thread, some great stories so thanks to everyone 

My story:

Started working early 2000s as a graduate with no real interest in pensions. Coming out of a drunken post student haze in student debt who does? As time had passed and the mortgage has been paid off (maybe one more move in us with younger children),  I've found the thrill of contributing to a pension to be addictive, moreso to try and reduce my tax bill and lower net income.

Currently at the age of 42 with a pot of £565k in standard life and have been maxing out year on year for the last few years. Will continue to contribute max yearly allowance for the next few years then have a think about any potential LTAs etc so perhaps ramp down yearly contributions come 45. In an industry that can be fickle with cyclic tendencies so trying to make hay etc etc

Partner around same age has £250k pension and also starting to contribute closer to the yearly limit to get their pot up in value.

I'm hoping to retire at 58 (kids left uni is that's what they choose) when I can collect the pension. Additional sources of income would be rental property between us (£18k/year with no mortgage on property at present) and currently around £115k in ISAs (mixture of S&S and some cash) combined with around £100k in saving accounts. Partner also has some but don't know the exact details. 

Plan to keep on investing £20k/year in S&S ISA and my partner will do the same for next 10+ years as we approach retirement. We are both in the higher rate income tax band (over £100k each) so trying to keep below this for tax.

Who knows where life takes us but hopefully we will be set up well and financially stable to still have all our limbs and mind to enjoy retirement. Grew up with no money (parents would buy clothes from charity shop or hand me downs etc) as a child as did my partner so we both live quite a frugal life and try to teach our young children the value of money.

Peterrr

A modest story of success for anyone who feels they've missed the boat. For a variety of career and family reasons, neither my wife or I had a penny in pensions until 14 years ago (by then we were just into our 40s). We now have a little over £330k between us and our contributions have been ramped up to ensure we both remain below the 40% tax rate - which means that (with employer contributions) more goes into our pensions than into the bank each month.
So its never too late to start!

Freedomforever

arthurdick said:

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.

Congratulations, sounds as though you have a great appreciation of life and have gleaned the advice of good people here on MSE. I recently joined this forum and found @xylophone among many others to offer some great insight and advice. 

My husband has a LGPS pension and is also a small earner. We transferred a 58k personal pension (which he did start paying £20 into age around 30) into his LGPS account some time ago.

Redundancy and health reasons meant he had only been working part time since 2014. I’ve also had my challenges so we realised this would have an impact on our joint ability to build up anything more than a modest pension income.

Two years ago he started working full time, moving jobs but staying within the LPGS scheme. We are wondering if he could retire early. We know it will mean slightly less income.

Are the AVC contributions within the LGPS when claiming treated separately?

The general feeling we have from advice here, having a lump sum via our particular scheme isn’t really beneficial. We haven’t considered paying AVC’s but reading through his schedule it seems AVC’s are held by a choice of two other companies within the LGPS.

Perhaps it’s worth looking into if hubby continues working at present. However on a cheery note, the outlook for us is, we’ve fortunately totted up a little more retirement income than first expected, still modest but manageable for our needs.

I would very much like my husband to retire maybe later next year, his official retirement is September 2026. Since working with a small team of chaps, the camaraderie he’s experienced has lifted his spirits and confidence so much. This is of course fabulous and I guess why he’s a little reluctant to change the status quo at the moment!

Wishing you well and a happy retirement!

savingholmes

@Freedomforever

My understanding with AVCs and the LGPS is that the whole amount can be tax free of the AVCs - as long as it's not more than 25% of the value of the entire pension. They calculate the value of the pension as 20 x the annual figure plus the AVC value. I'm unclear however how it's calculated if you take your pension early. His own pension provider should be able to tell him different options and are likely to have a dedicated website explaining things.