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I don't understand pensions...
Puddylove
Posts: 507 Forumite
...which is bad news as I'm in my 40's.
Can anyone point me to any resources so I can better understand how pensions work?
Thanks.
Can anyone point me to any resources so I can better understand how pensions work?
Thanks.
0
Comments
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https://www.gov.uk/new-state-pension/how-its-calculated
Get a new state pension statement.
https://www.gov.uk/check-state-pension
Do you have/have you ever had an occupational/private pension?
https://www.moneyadviceservice.org.uk/en/categories/types-of-pensions0 -
Look at the links above, esp pension need to knows.
Then, a few basics.
The very best pension, is the one someone pays in for you- if your employer has a pension- join it today. Otherwise you are throwing away free money.
There are 2 kinds f employers pensions, one is DB- based on no of years you work there, and your salary (be it final or average). No pot of money, but a list of guaranteed benefits when you retire. Second is DC, based on you and your employer paying into a pot, which is invested into funds. Rises and falls with t he market, but rises overall as the decades go by. And you will have more than 2 decades to retirement as you havent started yet.
Second, your contributions. If you pay basic rate tax, every 100 you put in costs you 80. As the income tax you paid in it is refunded to you within the pension (if you pay HR, every 100 you put in costs you 60).
If your employer using something called Salary sacrifice, that is even better (ie paying into the pension from money that hasnt been taxed yet) as this means you also save the NI contributions, and extra 13% or so back to you!).
Lastly investing in general (go to monevator website and read some articles). 2 important ones for you to read are compounding returns, and pound cost averaging as these will explain some advantages to investing from your income monthly (which is how most people pay for their pensions).0 -
Thanks, both.
I should get the full state pension, so that part is ok.
I also have a TPS pension which will pay me £4K roughly each year, and £12k lump sum once I turn 60.
At the moment I pay into USS scheme, but I cannot get my head round how it works. It seems to have three parts;
A final salary scheme bit, now closed which suggests it will pay the same as the TPS one, by chance.
Then a new scheme which pays 1/75 of salary - but my salary is made up of a FT job, then multiple variable contracts so they only show my FT earnings on the system.
The third but is where I make 1% contributions, matched by my employer - I have only started this a few months ago, but no clue what happens to that money...
I've asked for a statement from USS.
I'm worried I'm not doing enough...but don't know what else I should be doing...0 -
If you pay more do they pay more? If so, do it. Maximise their match.I make 1% contributions, matched by my employer
Pay more in, get more out. No need to over complicate things.I'm worried I'm not doing enough...but don't know what else I should be doing...0 -
so you should get approx. £16k-ish p.a. from state, tps and part of uss, with "some more" from the other 2 parts of uss....
1. find out from uss what the other two parts are likely to produce.
2. add that to the £16k
3. decide if that's enough or not in retirement, and if not look into how to improve it......Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple
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PeacefulWaters wrote: »If you pay more do they pay more? If so, do it. Maximise their match.
Pay more in, get more out. No need to over complicate things.
No, I can pay more in but the employer stops at 1%.
Pay more into USS, or elsewhere?0 -
so you should get approx. £16k-ish p.a. from state, tps and part of uss, with "some more" from the other 2 parts of uss....
1. find out from uss what the other two parts are likely to produce.
2. add that to the £16k
3. decide if that's enough or not in retirement, and if not look into how to improve it
I make it around £14k - and if only it was easy to work out the other 2 parts! If it's 1/75 of salary, and I earned £60k this year, would that mean my pension would increase by £800 due to this year's contributions? (I'm ignoring the 1% bit).0 -
I make it around £14k - and if only it was easy to work out the other 2 parts! If it's 1/75 of salary, and I earned £60k this year, would that mean my pension would increase by £800 due to this year's contributions? (I'm ignoring the 1% bit).
Thats a definite maybe.
It may be on your salary at retirement, an average of your salary over the final x years, or your highest salary throughout your career, or some other measure of "salary"
Plus it may be on your whole salary, your salary minus bonuses, or some melding of the two.0 -
I make it around £14k - and if only it was easy to work out the other 2 parts! If it's 1/75 of salary, and I earned £60k this year, would that mean my pension would increase by £800 due to this year's contributions? (I'm ignoring the 1% bit).
1. full SP is £8.1k a year, added to (your figures) of another £8k between tps and part of uss....£16k-ish in my book
2. in broad principles, yes (but as anotherjoe says above, salary +/- bonuses, etc), that's how career average schemes work.......Gettin' There, Wherever There is......
I have a dodgy "i" key, so ignore spelling errors due to "i" issues, ...I blame Apple0 -
AnotherJoe wrote: »
Thats a definite maybe.
It may be on your salary at retirement, an average of your salary over the final x years, or your highest salary throughout your career, or some other measure of "salary"
Plus it may be on your whole salary, your salary minus bonuses, or some melding of the two.
No, no, no, you are not meant to confuse me more!
The TPS website is so clear....the USS ones (yes two different ones for different parts) are like mud.
I rather wish I had just saved instead...0
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