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Should I save or put money into my workplace pension?
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LesWhinin1822
Posts: 4 Newbie

Ok im 50 (will be 51 in Nov) so I figure I have 18 years before I can retire pretty much. I have bills covered and I am in full time employment with a company pension plan but that is recent, last 2 years. Before that I was caring for my father before he passed so my savings and pension were nil. I work full time and I make between 24k and 32kpa. Contracted for lower hours but I have worked 45h/w since I started. My company pays 3% contribution flat and wont increase it at all. I can put aside ~£500 p/m and I have also increased my pension contributions to ~£200p/m though work calculates their contributions disregarding the firest ~£5k earned per year so their contribution works out ~£60 p/m. I have an emergency fund for bills and the like incase everything goes tits up with work. So my question is with my shortened timeframe would I be better off upping my pension contribution, dropping the pension and upping the savings, or doesnt it make much of a difference? If saving is the answer then where? I realise in 2045 state pension will be small compared to living expenses I just want to be comfortable one way or the other. I dont have a mortgage and I own a flat so no need to worry about rent. If anyone needs more information then feel free to ask I think ive covered most things.
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How is your pension contribution processed - salary sacrifice?
Pension contributions will be tax free and the sort of numbers you are talking about mean that Highgate tax will never be a complication. If Sal sac then you would also benefit from saving the 8% NI on your contribution.I’m a Senior Forum Ambassador and I support the Forum Team on the Pensions, Annuities & Retirement Planning, Loans
& Credit Cards boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com.
All views are my own and not the official line of MoneySavingExpert.1 -
Lots of questions in order to help!
What are your goals for retirement? Do you think you can keep going for another 18 years? How much do you need in retirement per year?
Do you not have any saving in your pension from before your time as a carer?
What does your state pension forecast stay?"No likey no need to hit thanks button!":pHowever its always nice to be thanked if you feel mine and other people's posts here offer great advice:D So hit the button if you likey:rotfl:0 -
I realise in 2045 state pension will be small compared to living expenses I just want to be comfortable one way or the other
Currently there is a Triple Lock on State pension annual increases, which means it goes up every year by inflation as a minimum, and can go up more.
In recent years the state pension has been actually increasing in real terms.
The Triple Lock is expensive for the Govt and it maybe removed at some point ( although will be politically very difficult to do that) Even if it was, it will probably still at least increase with inflation. So its spending power in 2045 should be similar to today.1 -
When you cared for your father did you get Carer's allowance? If so that should have given you credits towards the state pension.You need to read all the forecast. It may tell you how many more years you need to get the maximum, or (if you are very lucky) that "you cannot improve your forecast".If you need more years that the 16 you plan to work, then using some of the spare money to buy missing years is well worth it.If you put up details of your forecast (anonymised) people here can suggest what to think about.0
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MallyGirl said:How is your pension contribution processed - salary sacrifice?
Pension contributions will be tax free and the sort of numbers you are talking about mean that Highgate tax will never be a complication. If Sal sac then you would also benefit from saving the 8% NI on your contribution.
The contributions seem to go out before tax. I was going to ask about Pension tax credits but that just seems to be less tax when youre getting the pension rather than them adding more into the pension fund0 -
LHW99 said:When you cared for your father did you get Carer's allowance? If so that should have given you credits towards the state pension.Check your forecast hereYou need to read all the forecast. It may tell you how many more years you need to get the maximum, or (if you are very lucky) that "you cannot improve your forecast".If you need more years that the 16 you plan to work, then using some of the spare money to buy missing years is well worth it.If you put up details of your forecast (anonymised) people here can suggest what to think about.
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Simon11 said:Lots of questions in order to help!
What are your goals for retirement? Do you think you can keep going for another 18 years? How much do you need in retirement per year?
Do you not have any saving in your pension from before your time as a carer?
What does your state pension forecast stay?0 -
LesWhinin1822 said:Simon11 said:Lots of questions in order to help!
What are your goals for retirement? Do you think you can keep going for another 18 years? How much do you need in retirement per year?
Do you not have any saving in your pension from before your time as a carer?
What does your state pension forecast stay?That way you build up a pot for shorter term access if needed, but then also have something that will supplement your state pension later on, and give you a more comfortable retirement.0 -
It seems you are getting very little from your employer. Is there scope to consider another job not only to pay more now you can fully commit but with the intent of getting better contributions and scope for Sal Sac and AVCs?
Failing that then setting up a SIPP might be the route. Have a look here: pensions-and-retirement and here: https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/choosing-a-pension-yourself1 -
@artyboy is giving good advice. Absent more info to get analytical about it.
Pension savings get a top up. Tax relief credited. Big advantage. Up to the annual limit (annual allowance). Limited by "pensionable income" from employment - that's the other rule to be aware of.
The other advantage (in some ways) for the easy come easy go with money - is that the pension money is "locked up" until minimum access age. Circa 57 now but likely rising with State Pension age minus 10 or so. No touch.
ISA savings don't get a top up. But aren't locked up. Can access any time. Rainy day fund. If a bad thing happens along the journey to pension age. Can be invested in a cash ISA or in stocks and shares (funds) just like a pension. NO income tax. No CGT. Same as the pension. Flexible. Accessible. No top up.
50:50 also innoculates somewhat from changes to the one or the other i.e. the things the government (of whatever colour) will do next.
All the current speculation is that to pretend to keep manifesto promises re primary taxes on working people. Reeves will be going down all the sofa cushions looking for "clever wheezes" to find tens of billions later this year. Ideas include Cash ISA annual savings limit restricted vs UK investing stocks and shares ISA (something of a return to its original big/small form - well well - nothing really changes). People like the cash ISA for emergency funds because - depending on the nature and timing of your emergency. The stock market may not be co-operating. e.g. Mass layoffs.
Pension reliefs targeted for more "clever" tapers and additional complexity and similar nonsense. Mostly creating stupid but slighty obscured higher rate marginal bands for particular ranges of income. Mostly higher rate 50k+. Actually admitting where we are. Prioritising spending differently. And raising the main taxes on income, cgt, and consumption (vat) - would be the economically sensible route. But we don't live in that world. All our politicians (of all parties) absolutely refuse to engage with the reality and tell us the truth. And then act prudently and as *simply* as possible to address it. So it is a fair prediction we will get more windy rhetoric and complications come the autumn.0
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