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  • FIRST POST
    • mossmanian
    • By mossmanian 8th Aug 18, 12:54 PM
    • 6Posts
    • 1Thanks
    mossmanian
    Should I rely on my company pension?
    • #1
    • 8th Aug 18, 12:54 PM
    Should I rely on my company pension? 8th Aug 18 at 12:54 PM
    Hello,

    I'm wanting some advice on my Pension and how much I should rely on it moving forwards.

    I'm 32 years old, I have been at my current employer for 13 years. I have only been paying into a Pension for the last 7 or 8 years (from memory)

    I pay 103 per month (4%)
    My employer pays in 257.50 per month. (10%)

    Total: 360.50 per month.

    My current plan value is only 15,904.

    I have no plans to leave this company and wish to still be here come my retirement age.

    Over the next couple of years, I plan to increase my pension to the maximum employers contribution which hits me at 9% (231.75)

    If I put in 9% (231) my company put in 14.10% (363 making a total contribution of 23.10% (594).

    On the basis I retire at 70, I have 38 more years working.

    At those increased levels (say from today)
    I work it out as

    7128 PA
    x38 yrs
    270,864
    + current plan value 15k)
    285,864


    285k doesn't seem a lot of money to live on for the rest of my life, if I lived another 20 years, it's only 14k PA!

    Does this seem a logical step?
    is 70 too young to plan to retire in the current climate?

    I could aim to pay more into my pot, however from 9% onwards for ever 05% I increase it, my employers contributions drops to 0.05% so the benefits seems neglegable.

    I have not factored in any state pension (8.5k) (currently age 68), as who knows if they'll even exist in 40 years time?
Page 2
    • FIRSTTIMER
    • By FIRSTTIMER 9th Aug 18, 9:12 AM
    • 359 Posts
    • 61 Thanks
    FIRSTTIMER
    This is a great article, thanks - my question would be, if I have maximised the amount of pension I can save out of my salary.

    Sorry to hijack the post....but

    Does the additional I can save go into a S&SLISA/S&SISA or a SIPP. This is really to bridge a gap between say age 58-60 and 65. I have done half and half at the min between the two stocks and share options - but should I really be doing the LISA more due to 25% top up? I was a higher rate tax payer but now not.
    • Anonymous101
    • By Anonymous101 9th Aug 18, 9:31 AM
    • 1,130 Posts
    • 529 Thanks
    Anonymous101
    This is a great article, thanks - my question would be, if I have maximised the amount of pension I can save out of my salary.

    Sorry to hijack the post....but

    Does the additional I can save go into a S&SLISA/S&SISA or a SIPP. This is really to bridge a gap between say age 58-60 and 65. I have done half and half at the min between the two stocks and share options - but should I really be doing the LISA more due to 25% top up? I was a higher rate tax payer but now not.
    Originally posted by FIRSTTIMER
    I'd been through the same dilemma.

    I think its very personal. The amount you earn and personal circumstance plays a big part.

    Earnings is the main one. Even as a standard tax payer you're still losing 32% of your money through PAYE so more goes to the tax man than you get back in the LISA bonus. Obviously if you're a higher rate tax payer pension saving is by far the most tax efficient.

    How old you are also plays a part. Bridging the gap as you say is the main factor and to my mind the younger you are the more I'd be looking to save into my S&S ISA due the the flexibility it affords. The min. age you can access your pension could easily be increased to 60 within the next 5-10 years. If like me you're in your 30's still this is a big risk so having the investment in an accessible account like an ISA is important. If you're in your late 40's now its not so much of a risk and in that case I'd be more inclined to be putting as much as possible into a pension. Don't forget though that you can always make large additional contributions into your pension from your ISA as you near pension age and get the tax relief then.

    I still can't get away from "losing" all that money to the tax man so I do try to contribute as much as I dare to my pension. Although at my current savings rate i'll likely reach F.I. by about 45 so I'd need to bridge the gap for a decade or more.
    • mossmanian
    • By mossmanian 9th Aug 18, 12:15 PM
    • 6 Posts
    • 1 Thanks
    mossmanian
    Thank you all for very valuable input.

    Reoccurring message here is to get to the 9% as quickly as possible, thanks for that, I'll look to sort that ASAP.

    In truth, my yearly bonus is often used for family holidays and home improvements, so for the time being, I think I will avoid putting it in an S&S ISA or directly into the Pension pot until normal life is a bit more stable.

    I'd want to stop much before 70, but not convinced how feasible that is given my current plans.

    Thanks for all the insight, it's been most helpful.
    • FIRSTTIMER
    • By FIRSTTIMER 9th Aug 18, 2:08 PM
    • 359 Posts
    • 61 Thanks
    FIRSTTIMER
    Great Thread. Defo maximise your pension is the general consistent theme.
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