Pension pot improvement guidance

BloomNew

Hello MoneySaving,

I'm a newbie and excited to have joined the forum!

If it's permitted I'd like to ask for guidance to improve my husbands pension pot. Recently I've been trying to get our finances, Will's etc in order and finally got to Pensions.

My husband's total pot is awful and he didn't increase any company contributions that I'd asked him to do. Anyhow we are we're we are.  Last month he was 60 so we don't have much time to improve his status.

I've asked him to obtain an updated version of his companies pension benefits, this is pending. The current company tender might change around Sept/Dec this year and he'll TUPE over and I suspect the pension benefit may change

He has two personal pensions that aren't huge, I think he might be better, if possible, transferring these into a company one. I thought the amount he pays into the active one would be better paid into the company one

We no longer have a mortgage and able to make more contributions but not sure how much.

He also has a Income protection insurance which is becoming rather expensive. Considering if we should cancel this and pay the monthly amount into the pension.

I haven't supplied figure but happy to give rough ones if required.

I'm really concerned how bad his pot is as this will affect us both. I believe my pot is ok but wouldn't be living a life of luxury.

Future plans were to downsize and move somewhere away from the London commute area but feels this will need to be parked and both of us will need to work longer. 

Any help to make our decisions would be greatly appreciated!

Hoenir

The more you put in the more you'll get out. Financial performance over any given timeframe is not guaranteed. Ensure that you invest withing your own risk appetite. Fear of missing out can suck investors into bad investment choices. 

Sounds as if the key is understanding where and what you spend your money on currently. 

Exodi

Impossible to give any meaningful response without more of the detail.

For example what are the 'personal pensions' (presumably SIPP's - on what platform).

What is the 'company one' - is it a DC scheme? If so, it really doesn't make much difference where he keeps the money (though for simplicity it might be worth keeping all DC's pensions on one platform). It's also worth having a look and a think about what he is invested in.

Employers are required to provide a contribution of at least 3% to an employees 4% (5% inc tax relief), but some go above this and match to a certain amount.

For example if an employer matches and employee contribution up to 10% (e.g. if the employee puts in 10%, the employer will put in 10%) then that's free money.

Of course, he may have a DB scheme, in which it's also worth looking into the details.

Personally, I wouldn't rush to do anything until you understand a lot more about his pensions and pensions in general.

Generally, it is very tax efficient to contribute to a pension - especially if you have little pension provision (so are anticipating paying only basic rate tax in retirement). Many people nearing retirement start contributing as much as they possibly can.

Lot's more to say but the above would be a good start.

Marcon

BloomNew said:

Hello MoneySaving,

My husband's total pot is awful and he didn't increase any company contributions that I'd asked him to do. Anyhow we are we're we are.  Last month he was 60 so we don't have much time to improve his status.

Unless he owns the company (and it doesn't sound as if he does), it's not for him to dictate how much his employer contributes. I wonder if you're referring to salary sacrifice? Or 'contribution matching' if he pays more than the minimum and he's in a defined contribution scheme?

BloomNew said:

I've asked him to obtain an updated version of his companies pension benefits, this is pending. The current company tender might change around Sept/Dec this year and he'll TUPE over and I suspect the pension benefit may change

Not sure what you mean by this - an up to date statement of how much his pension is worth?

BloomNew said:

He has two personal pensions that aren't huge, I think he might be better, if possible, transferring these into a company one. I thought the amount he pays into the active one would be better paid into the company one

Why? Just being a company scheme doesn't automatically make it a better choice. You need to look at charges and compare those, and also whether the company scheme has fund choices which suit your needs.

Grappling with all this isn't easy, so you might consider a free appointment with PensionWise https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise to help you get to grips with terminology, options etc. They give guidance (not advice) so can't tell you what is best, but the more you understand the better informed your own decisions.

squirrelpie

BloomNew said:

He also has a Income protection insurance which is becoming rather expensive. Considering if we should cancel this and pay the monthly amount into the pension.

Why does he pay for this? Is he at great risk of losing his job? Would he have difficulty finding another job if so? Does he have medical problems?

You say he didn't increase company pension contributions when you asked him to. So are you actually agreed about the need to improve his pot?

BloomNew

Thank you all!

He definitely needs to improve his pension pot, he doesn't own his own company but an employee. The I asked him to increase his contributions to a higher % but just come to light he never go round to it. He already need to catch-up on his pot and he has agree with this.

He works in maintenance and the building is looking to change the maintenance company he works for. They want to keep him so he's be asked to move over the whoever the new company becomes.

My husband seems pretty secure in his job and I still work full time and mortgage free so we could probably cope if we cancelled the income protection

I don't understand the pension terminology DB, DC and grateful for the advise to contact 'PensionWise', this is great, I wasn't aware of them.  I do have an understanding on the employer matching and employee contribution schemes as I have a couple myself.    

I hope I made a little more sense

vacheron

BloomNew said:

Thank you all!

I've asked him to obtain an updated version of his companies pension benefits, this is pending. The current company tender might change around Sept/Dec this year and he'll TUPE over and I suspect the pension benefit may change.

TUPE will treat pensions differently depending on what kind of pension his company are currently paying into (workplace or personal) you have more protection if his company are paying into his personal pension on an contractual basis.

He works in maintenance and the building is looking to change the maintenance company he works for. They want to keep him so he's be asked to move over the whoever the new company becomes.

Be aware of the wording here. If the building manager is switching to another maintenance company and he has "asked" your husband to move over to the new company so that his services can be retained by whoever owns / manages the building, this will not count as a TUPE event unless the new maintenance company is simultaneously buying / absorbing the old maintenance company. 

Albermarle

BloomNew said:

Thank you all!

He definitely needs to improve his pension pot, he doesn't own his own company but an employee. The I asked him to increase his contributions to a higher % but just come to light he never go round to it. He already need to catch-up on his pot and he has agree with this.

He works in maintenance and the building is looking to change the maintenance company he works for. They want to keep him so he's be asked to move over the whoever the new company becomes.

My husband seems pretty secure in his job and I still work full time and mortgage free so we could probably cope if we cancelled the income protection

I don't understand the pension terminology DB, DC and grateful for the advise to contact 'PensionWise', this is great, I wasn't aware of them.  I do have an understanding on the employer matching and employee contribution schemes as I have a couple myself.    

I hope I made a little more sense

DB = Defined Benefit, sometimes referred to as a final salary scheme. Mostly only in the public sector nowadays but not exclusively.
DC = Defined Contribution - this is where you basically just build up a pot of money. This is the type that is most likely to be his workplace pension and will definitely be his personal pensions. 
These types are normally invested in the stock market.

LHW99

Have you both checked your state pension forecasts?

https://www.gov.uk/check-state-pension

Read the whole page - it will tell you how much you have already qualified for / how many more NI years you need to get to the maximum. If it has the magic words "You cannot improve your forecast" then you will be doing fine.

Then think about what you will need pa (per month) to live on when you retire - current outgoings less work expenses - and add up what you already have. Then you will know how big the gap to be filled is.