32 and no pension provision

toastersrock · 17 March 2017 at 12:52PM

I am the first to admit that I have been negligent with my finances and the only item left on my list to tackle is to sort out a private pension.

I have a pension through my workplace which I pay into but I am under no illusions that I am going to need to invest in a private pension as well. Thing is, I don't really know where to start and I am a little bit daunted when I have searched on the internet previously.

How much should I be trying to achieve in my pension pot for example? I haven't got a clue so if anyone can help point me in the right direction it would be great, thank you!

kidmugsy · 17 March 2017 at 1:03PM

Start by telling us what your current pension provision is.

toastersrock · 17 March 2017 at 2:09PM

Eeek, I literally have no idea. I have worked for my company for 8 years matching at 3%. I earn about 40k a year if this helps?

ChrisSargent · 17 March 2017 at 2:21PM

toastersrock wrote: »

Eeek, I literally have no idea. I have worked for my company for 8 years matching at 3%. I earn about 40k a year if this helps?

I'm still new to all this pensions stuff but I would suggest you contact your provider and ask for a statement. Then you need to decide what kind of life-style you think you will want when you retire - bare in mind the cost of inflation etc. so that you are being realistic.

Then find a pension calculator and use it to determine what size of pot you will probably need to give you what you need. From this you can see what kind of contributions you should be making.

As you are only 32 you probably have another 35 years to go, although anything could change re legislation in that time.

toastersrock · 17 March 2017 at 2:46PM

Ok, thank you for your suggestions Chris. Sounds like a good place to start!

atush · 17 March 2017 at 2:58PM

some places to start are Cavendish online, and Hargreeves Lansdown- there are others.

Open a PP, pay money into it monthly. For now, until you learn more about investing, forget the fancy stuff. Pick a global tracker or Multi asset fund to get diversification.

Once you have 20K or so saved, you can move on to getting financial advice from an IFA.

Dont forget S&S isas and LISAs too.

bigadaj · 17 March 2017 at 9:10PM

toastersrock wrote: »

Ok, thank you for your suggestions Chris. Sounds like a good place to start!

Will the company match any more contributions, if so then that would be the best option. Also employer pensions can have very low cost so upping your contribution be a cheap option.

In terms of sums then there are plenty of online calculators which will estimate what you might end up with at retirement, to give an idea then you could sustainably take around £4K per year from every £100k in your pot, so it's a lot of money.

BLB53 · 17 March 2017 at 9:28PM

How much should I be trying to achieve in my pension pot for example?

It will depend how much you want to retire on and when you want to retire. At 32 you probably should be looking to save at least 15% of your income...so ~£500 per month.

Have a look at low cost sipp options and a simple all-in-one option eg Vanguard Target Retirement funds.

Finally check out some of the pension articles on diy investor
http://diyinvestoruk.blogspot.co.uk/p/pension.html

JustAnotherSaver · 17 March 2017 at 9:46PM

Sorry to hijack this thread but it may be a question that is also beneficial to yourself so i hope you don't mind

......

You say you are under no illusions that you are "going to need to invest in a private pension as well"

My question goes out to anyone 'in the know' - anyone reading this, why would the OP 'need' to invest in a private pension as well?

Why would that be a better idea (since they admit that like myself they have no clue - which is why i'm interested in this idea) than lumping that money into their workplace pension? So instead of for example 10% to the workplace & 10% to the private they just put 20% to the workplace pension?

MoneySavingUser · 17 March 2017 at 10:19PM

JustAnotherSaver wrote: »

Sorry to hijack this thread but it may be a question that is also beneficial to yourself so i hope you don't mind ......

You say you are under no illusions that you are "going to need to invest in a private pension as well"

My question goes out to anyone 'in the know' - anyone reading this, why would the OP 'need' to invest in a private pension as well?

Why would that be a better idea (since they admit that like myself they have no clue - which is why i'm interested in this idea) than lumping that money into their workplace pension? So instead of for example 10% to the workplace & 10% to the private they just put 20% to the workplace pension?

They don't necessarily need to - some reasons could be:

- Their employer doesn't let them put lump sums into the scheme;
- Their employer's scheme has high charges so normally they should only put in enough to get the employer matching amount;
- Their employer's scheme doesn't have the investments they want;
- If they have a DB pension and extra contributions go to an AVC pot then there may be restrictions on when it can be taken (e.g. it must be taken at the same time as the main pension);
- They want to put a small amount into a pot to take advantage of a small pot commutation lump sum;
- They plan to leave their employer soon and want to perhaps reduce transfer out charges if they don't want to keep that pot in their employer's scheme;

@toastersrock - have you been getting annual statements from the pension provider - if not request one.

JustAnotherSaver · 17 March 2017 at 11:11PM

MoneySavingUser wrote: »

They don't necessarily need to - some reasons could be:

- Their employer doesn't let them put lump sums into the scheme;
- Their employer's scheme has high charges so normally they should only put in enough to get the employer matching amount;
- Their employer's scheme doesn't have the investments they want;
- If they have a DB pension and extra contributions go to an AVC pot then there may be restrictions on when it can be taken (e.g. it must be taken at the same time as the main pension);
- They want to put a small amount into a pot to take advantage of a small pot commutation lump sum;
- They plan to leave their employer soon and want to perhaps reduce transfer out charges if they don't want to keep that pot in their employer's scheme;

Thanks. I read that & tried to apply it to myself to see if there's any reason a private one alongside a workplace one may benefit me.

I don't know what a DB pension is so i don't know if my workplace pension is one of those.

But the only one i can see applying to myself may be the employers scheme not having the investments i want.
Thing is, i don't know anything about it, so i can't say that i 'want' something, but i do wonder if i'm invested in anything worthwhile. When i got in touch with NOW Pensions the information was very wishy-washy, nothing specific.

I think my pension with NOW Pensions through work is very middle of the park. I actually prefer to go with something a little on the riskier side. On a sliding scale of 1-10 i'd say a 7-7.5.
So on that note i'm wondering whether it'd be worth keeping the workplace pension to a minimum & pay the remainder into an IFA-managed private pension.

So for example i currently pay in 10% of my wage. So right now that would drop to 1% into the workplace pension and 9% into the private pension.

32 and no pension provision

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free