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  • FIRST POST
    • AndyPK
    • By AndyPK 14th Apr 18, 10:27 PM
    • 2,783Posts
    • 768Thanks
    AndyPK
    Private Pension recomendations
    • #1
    • 14th Apr 18, 10:27 PM
    Private Pension recomendations 14th Apr 18 at 10:27 PM
    I'm loosing faith in my company pension. It gives 3 values at retirement.

    High, medium and low. predictions

    The medium value is less than will be paid into the pension which doesn't sound like a good deal to me!

    Company pays in 5%. I pay in 9%.

    So I think it would be good to have another pot. Any recommendations ?
Page 1
    • Brynsam
    • By Brynsam 14th Apr 18, 11:11 PM
    • 762 Posts
    • 477 Thanks
    Brynsam
    • #2
    • 14th Apr 18, 11:11 PM
    • #2
    • 14th Apr 18, 11:11 PM
    Assuming you mean in addition to your current scheme (otherwise you almost certainly won't get the employer contribution), anything which has cheaper charges might get you better projections - but these won't translate into a better outcome if the actual returns don't live up to the projections.

    Have you talked to your pension provider and/or employer about your concerns?
    • kidmugsy
    • By kidmugsy 15th Apr 18, 12:26 AM
    • 10,377 Posts
    • 7,067 Thanks
    kidmugsy
    • #3
    • 15th Apr 18, 12:26 AM
    • #3
    • 15th Apr 18, 12:26 AM
    Putting 14% into a pension is pretty good. It may not be in your best interest to contribute to a second pension unless you are trying to avoid higher rate tax.
    Free the dunston one next time too.
    • dunstonh
    • By dunstonh 15th Apr 18, 12:51 AM
    • 92,192 Posts
    • 59,354 Thanks
    dunstonh
    • #4
    • 15th Apr 18, 12:51 AM
    • #4
    • 15th Apr 18, 12:51 AM
    The medium value is less than will be paid into the pension which doesn't sound like a good deal to me!
    Have you actually read what the assumptions are on those projections?
    Do they match what you are likely to do?
    Are they representative of your investments?

    So I think it would be good to have another pot. Any recommendations ?
    Better to understand what you have and how example projections work rather than change to another provider. Otherwise you just end up with the same issue in 12 months time when the new provider issues their statement example projections using the FCA regulated example projection rates.

    If your pension is growing at 4%, 8% or 10%, you would get exactly the same projections on the statement. They do not reflect real world. They are projections using assumptions. They also deduct 2.5% p.a. for inflation. The low rate is usually a negative nowadays. The mid rate can be a negative if you are on cautious investments as the assumptions for deposit and fixed interest securities are low and a deduction for inflation sends it into negative.
    Last edited by dunstonh; 15-04-2018 at 5:59 PM.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • AndyPK
    • By AndyPK 15th Apr 18, 9:08 AM
    • 2,783 Posts
    • 768 Thanks
    AndyPK
    • #5
    • 15th Apr 18, 9:08 AM
    • #5
    • 15th Apr 18, 9:08 AM
    I was thinking of continuing with total/minimum of 6% with company one.
    Will I be forced to 9% next year or can I opt down ?

    I'm not a high rate tax payer.

    I didn't realise the predictions were regulated and meaningless. I will have a closer read

    I can part invest in higher risk stratigies. Happy to do but doesn't seam easy.
    • dunstonh
    • By dunstonh 15th Apr 18, 6:02 PM
    • 92,192 Posts
    • 59,354 Thanks
    dunstonh
    • #6
    • 15th Apr 18, 6:02 PM
    • #6
    • 15th Apr 18, 6:02 PM
    I didn't realise the predictions were regulated and meaningless. I will have a closer read
    They are not predictions. They are projections. Prediction is something that is likely to happen. Projections are examples using assumptions.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • Dox
    • By Dox 15th Apr 18, 7:41 PM
    • 352 Posts
    • 199 Thanks
    Dox
    • #7
    • 15th Apr 18, 7:41 PM
    • #7
    • 15th Apr 18, 7:41 PM
    I was thinking of continuing with total/minimum of 6% with company one.
    Will I be forced to 9% next year or can I opt down ?
    Originally posted by AndyPK
    You need to check your contractual entitlements.
    • sandsy
    • By sandsy 15th Apr 18, 10:59 PM
    • 1,312 Posts
    • 790 Thanks
    sandsy
    • #8
    • 15th Apr 18, 10:59 PM
    • #8
    • 15th Apr 18, 10:59 PM
    If the projected amount is less than you pay in, it means that the assumed net returns after charges aren't sufficient to match inflation. It doesn't mean you will get back less than you pay in, but on the assumptions in the projection, it does mean that if those assumptions are borne out in practise (which they won't be) they won't buy as much as the money you've paid in (due to inflation).

    That's not a reason to make rash decisions about stopping contributions or transferring the pension elsewhere. But do look at what the investments inside your pension are invested in. If they are invested so cautiously that the middle return isn't positive after inflation and charges, you may want to think about a different investment strategy, especially if you still have a decent time before taking anything out of your pension.
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