Scottish Life Group Personal Pension Plan

UglyBetty

I have just started a new job and my employer is offering pension plan with Scottish Life. I hope to retire in 6 years. The employer will contribute 5.12%. I know it's 'free money' but is it still worth it and should I let it stay with the default fund (Managed). I will also get a pension from my previous employer (approx £10000 p.a pension @ 60yrs) and lump sum approx £30,000. The nearer I get to retirement the more scary it seems. How can I maximise my income in retirement without working myself into the ground? (I will probably do part time or occasional work all the while I'm fit enough).

EdInvestor

Have you checked how much state pension you will get?

https://www.thepensionservice.gov.uk

They won't be able to give you a forecast until October, but may be able to give you an idea about whether you already have the 30 years to get the full basic and how much extra you are due for SERPS/S2P.

In theory it's probably still worth it, but if your state pension is fairly high you may prefer to save the money in your share ISA, where the income it will eventually produce is tax free (unlike the pension) and the capital available.

dunstonh

How can I maximise my income in retirement without working myself into the ground?

Firstly by taking the free money from the employer. It wont add it to much but its free so you would be daft not to take it. If you have other money purchase schemes you can combine them at retirement anyway.

should I let it stay with the default fund (Managed).

My views on default funds is that the are pretty much rubbish with just a few exceptions. They are jack of all trades, master of none and if that is what you want, then fine. I would spend some time and pick some of Scot Lifes other funds as some are quite good. Especially if the scheme has access to their core and satellite funds.

In theory it's probably still worth it, but if your state pension is fairly high you may prefer to save the money in your share ISA, where the income it will eventually produce is tax free (unlike the pension) and the capital available.

The ISA will never get close to providing benefits comparable to the scot life pension. Ed forgets that whilst the income is taxable on the pension, it gets tax relief on the contributions so its net result is the same as the ISA (tax relief in, pay tax on 75% of it at other end compared to no tax relief but no tax at other end).

So the ISA would have to grow more to make up for the free money that the pension gets.