Pension Review...

wymondham

Hi all you pension experts! Can anyone give me any advice on this please.

I have a company pension (contracted out?), which I don't think is very much - I contribute an extra £10 (:rotfl: ) a month and my employer makes a contribution - on the whole probably useless. I get lots of regular mail from my pension provider (norwich Union), but this does not mean anything to me!
I'm not entirely convinced by this as i don't really trust the company pension advisor (always has a top of the range Jag!)

I've cleared my mortgage and maxed out my ISA allocation - and intend to keep doing this yearly. As I'm now 40, what would your advice be on my pension now as I do need to think about it a bit more. Should I increase my contribution, or go it alone with something I trust more (but does not have the employer contribution). I'd like to be independant of the company if i can for other reasons. I'm also suspicious by nature and don't really trust the whole pension culture in case my fund goes t!t5 up! (was stung with my rubbish endowment!)

How much per month would get me a decent pension ?

Anyones thoughts would be greatly appreciated!!!

bigheadxx

If you follow this link below and click on illustration you can put in some figures of your own. It shows you what your pension pot will be worth after each year based on % growth and your contributions and what your pension income could be when you retire. www.sippdeal.co.uk

wymondham

thanks bigheadxx, how do i know the growth %? - sorry but I am as green as can be with pensions!!!

bigheadxx

They assume 7% ( standard figure used by all pension providers) but also give a total pot size for smaller and larger growth so you have 3 figures to compare.

wymondham

anyone else got any views on this?

EdInvestor

wymondham wrote: »

I have a company pension (contracted out?), which I don't think is very much - I contribute an extra £10 (:rotfl: ) a month and my employer makes a contribution - on the whole probably useless. I get lots of regular mail from my pension provider (norwich Union), but this does not mean anything to me!

Suggest you actually try reading it and find out how much the fund is worth, what it's invested in, how much you are putting in and ditto your employer, plus what it's projected to produce when you retire. If you pay in more will your employer match the contribution? Free money is always worth having.

Later this year you also need to get a forecast for your state pension(s) from https://www.thepensionservice.gov.uk when they have updated their computer for the recent changes.

Once you know the totals of these two you'll have a vetter idea of how much more you need to save.
.

I've cleared my mortgage

That's a good start.

... and maxed out my ISA allocation - and intend to keep doing this yearly.

Is that the maxi ISA, or just the cash ISA? If only the latter, you could start maxing out the stocks and shares ISA as well.use a discount broker such as https://www.h-l.co.uk and invest in a mix of funds suiting your attitude to risk.This will proivide additional tax free income in retirement above your pensions and also provide the 'independence" you prefer, without losing out on the free money.

wymondham

EdInvestor wrote: »

Suggest you actually try reading it and find out how much the fund is worth, what it's invested in, how much you are putting in and ditto your employer, plus what it's projected to produce when you retire. If you pay in more will your employer match the contribution? Free money is always worth having.

Later this year you also need to get a forecast for your state pension(s) from www.thepensionservice.gov.uk when they have updated their computer for the recent changes.

Once you know the totals of these two you'll have a vetter idea of how much more you need to save.
.


That's a good start.



Is that the maxi ISA, or just the cash ISA? If only the latter, you could start maxing out the stocks and shares ISA as well.use a discount broker such as www.h-l.co.uk and invest in a mix of funds suiting your attitude to risk.This will proivide additional tax free income in retirement above your pensions and also provide the 'independence" you prefer, without losing out on the free money.

many thanks for the reply, I have/do read it but it does not really make much sense.. I shall persevere! My ISA is just a cash ISA

wymondham

Right, I've got some advice from IFA on my situation, and after a brief meeting it was decided my best course of action would be:

Keep paying into the cash ISA's to the max

Review my company pension to see if I can change the investment away from 'with profits' to one that gives a better return - if i can then up the contributions to this considerably (employer will only contribute the samwe as they are already doing but better than nothing!) - if i stick with this then he will charge for advise on this as it's not his.

if i can't change this current pension then get a new pension as well as this one to invest more flexibly and put my extra cash into this one... there will be no payment on this as such as he'll take a cut from it.

Invest in share ISA's to the max, again no fee's but he'll take a cut.

This all sounded fine to me - can anyone see any holes?

thanks!!!

ps: my existing pension provision equates to about £100 per month !!!!! (told you it was useless!! - possibly a chocolate fund??)

jamesd

That advice seems good. In particular the use of a S&S ISA, a big gap in your previous planning.

Cash ISAs are fine for emergency fund money but not good enough long term. For bigger emergency fund money in an ISA you could use corporate bond funds (might be down by 10% at the moment you need them, not too bad) or BlackRock UK Absolute Alpha. IFA may have a maximum cash ISA value in mind, if not, you should think of your possible emergency money need for unemployment or injury. Emergency money for other things includes options like arranging a 5k or 10k or more overdraft facility - those are very cheap for a few weeks and give time to sell investments while still paying the bill instantly.

Funds like that BlackRock one put their gains into capital growth so they can be held outside an ISA and pension without tax penalty, assuming your CGT allowance is available. That makes it an interesting one for emergency money because you can get investment growth levels and use it in an emergency without having to throw away any of the painfully accumulated ISA limit.

Have a read of the S&S ISA fund choice discussions, those apply to pension investing as well as S&S ISA investing.

If you're in maximum saving mode one interesting approach is all higher rate income into pension plus using the maximum ISA contributions. This can be useful until you've built up a large enough investment pot that you're able to hit your retirement objectives at a very cautious 5% investment growth rate.

My own medium term objective is both accumulating enough pension money to retire and live reasonably at 55 and to have enough non-pension money to live on until I am 55.

wymondham

many thanks james, as ever!! :T