Pension advice for naïve 45-year-old

elsmandino

Morning all.

I have a number of recent posts on the MSE forum as I am trying to sort myself out, financially, after many decades of neglect.

Ashamedly, I have never taken any interest in my pension until now.

I have just logged into my work pension account and it says "If you asked to transfer your money to another pension scheme on 31/10/24, we would have transferred £79.183.82".

I realise that this is not very much and I need to know what I can do to try and improve things.

My breakdown is as follows:

£0.00 money you've saved into you pension plan
£47,341.55 Money from your employer and government through tax relief and any rebates
£2,133.81 Money transferred into your pension plans less any payments out
£29,708.46 Other changes to your pension plan

The money is held as follows:

AGN LGIM UK Eq Idx (BLK)    AMC(%0.35)    24954.401 Units  164.2395 Unit Price   £40,984.98
AGN LGIM Multi Asset (BLK)   AMC (%0.43)   26,719.560 Units   142.9621 Unit Price  £38,198.84

I have literally no idea what any of this means and would really appreciate some advice.

JoeCrystal

Well, £79k is not "not very much" you may be surprised that median pension pots are much lower. But it depends on what you NEED and WANT to retire on. Work backwards from it to see how much you need to contribute.

I would say, though, that you should ensure that you take full advantage of your employer's contributions if they are willing to match extra. 

elsmandino

Thanks Joe - that has made me feel better, knowing that things could be worse.

How do I know what my firm's policy is on additional payments?  I think it is called salary sacrifice.

Is it simply a case of contacting the HR department for further details?

Also, worked for at least two other companies before getting my current job - they jobs were not particularly well paid and would have been only for a couple of years in total.  How do I add these to the mix?

MX5huggy

You have a pension that was worth just under £80k last October it will be worth a different amount today, don’t panic if it is less today, Trump has been messing about it doesn’t matter over the long term. 

You’ve never made any direct contributions, your employer has put in £47k including tax relief.
£2k came from somewhere else, did you transfer an old small pension when you joined this scheme. The investment has grown by £29k.

Within the pension your money has been invested in 2 funds.

A fund being a collection of investments.

tacpot12

elsmandino said:

...

The money is held as follows:

AGN LGIM UK Eq Idx (BLK)    AMC(%0.35)    24954.401 Units  164.2395 Unit Price   £40,984.98
AGN LGIM Multi Asset (BLK)   AMC (%0.43)   26,719.560 Units   142.9621 Unit Price  £38,198.84

I have literally no idea what any of this means and would really appreciate some advice.

You are invested in two funds: 

Aegon Legal & General Investment Management (LGIM) UK Equity Index  and 
Aegon Legal & General Investment Management (LGIM) Multi-asset and 

The UK Equity Index fund should follow the FTSE All Share Index. It's essentially a passive fund that just tracks the index. The assets in the fund are UK Shares (or other funds that hold UK shares). The low Annual Management Charge (AMC) reflects this. You hold 24954.401 units of this fund in your pension. The Unit Price is 164.2395 pence, so the value of your holding is £40,984.98

This fund looks to be doing quite well. 

The Multi Asset fund invests in shares (and it has some UK shares in it, so there is a small overlap with the first fund), property, bonds and other debt instruments. This fund has a higher annual management charge (AMC) because the fund manager has to do more work to decide what to hold in the fund. 

This fund is not doing so well. I would suggest that you look at the other AGN LGIM Funds that your pension would allow you to invest in and look at their performance. You can use the Trustnet site to do this. Have a look at this webpage here: Aegon LGIM Multi Asset (BLK) Pn K Fund factsheet | Trustnet

Check the cumulative performance figures for your Multi-Asset fund and compare it to the UK Equity Index fund here: Aegon LGIM UK Equity Index (BLK) Pn K Fund factsheet | Trustnet

Dazed_and_C0nfused

MX5huggy said:

You have a pension that was worth just under £80k last October it will be worth a different amount today, don’t panic if it is less today, Trump has been messing about it doesn’t matter over the long term. 

You’ve never made any direct contributions, your employer has put in £47k including tax relief.
£2k came from somewhere else, did you transfer an old small pension when you joined this scheme. The investment has grown by £29k.

Within the pension your money has been invested in 2 funds.

A fund being a collection of investments.

There shouldn't be any pension tax relief though with salary sacrifice.

The tax saving is from not having the earnings to be taxed in the first place.

elsmandino

Thanks everyone - this is proving a little more complex than I first thought.

My pensionable pay, as at 31/10/24, was £42,750.00.

How has my employer's contribution of £4,202.10 been reached?

I though that, by law, I had to contribute 5% of my salary to my pension - why is the statement showing nothing?

QrizB

elsmandino said:

I though that, by law, I had to contribute 5% of my salary to my pension - why is the statement showing nothing?

The minimum contribution under auto enrollment is 8%, with a minimum employer contribution of 3%. If your employer puts in more, the employee can put in less.

Also, you're contributing by salary sacrifice.

This means you're accepting a smaller salary in exchange for larger employER pension contributions. As a result, there are no employEE contributions; it all goes via your  employER.

(The erratic capitalisation is to draw attention to the difference.)

Dazed_and_C0nfused

elsmandino said:

Thanks everyone - this is proving a little more complex than I first thought.

My pensionable pay, as at 31/10/24, was £42,750.00.

How has my employer's contribution of £4,202.10 been reached?

I though that, by law, I had to contribute 5% of my salary to my pension - why is the statement showing nothing?

Salary sacrifice means you are agreeing to have a reduced salary in return for additional employer contributions.

You do not receive any pension tax relief on employer contributions as you have not paid them.

But by sacrificing salary you have avoided paying both tax and NI on the amount sacrificed.  So for most people, low earners being the exception, it is actually more tax efficient to use salary sacrifice despite not getting any pension tax relief.

elsmandino

OK - this is making a bit more sense now (I think).

I never remember being asked about salary sacrifice but, if I have signed up for it, so be it - seems to be a good idea.

I clearly need to start putting more into my pension - any idea how I can work out how much I should think about?

My employer seems to be putting in about 10% of my pensionable salary into my pension - that is quite generous, isn't it?

Dazed_and_C0nfused

elsmandino said:

OK - this is making a bit more sense now (I think).

I never remember being asked about salary sacrifice but, if I have signed up for it, so be it - seems to be a good idea.

I clearly need to start putting more into my pension - any idea how I can work out how much I should think about?

My employer seems to be putting in about 10% of my pensionable salary into my pension - that is quite generous, isn't it?

I think you are have misunderstood some of this.

Is the pay of £42,750 pre or post salary sacrifice?

If that is your original salary then yes about 10% is being added in.  But a proportion of that is you giving up salary.  Which is paid into your pension as employer contributions.  So your employer may not be being as generous as you think.

But you really need to establish the full picture to see what is happening.