Pension fund performance - do you monitor yours, how is it doing, do you actively change it?

Jack_green said:
I start to put all my earnings into sipp, since losing out to fiscal drag, keeping my tax free to spend, I was living with family after graduation. I been pretty lucky with these financial crashes. Kept most of my money out of shares, using interest compounding, I have take advantage of the crashes as I had 80%cash 20% shares before the crashes, then 60% shares 40% cash after then sold and returned to my 80 20.

Been filling up with the max amount over the last few years, but this is about to stop. It starting to fill for me as I getting nice average returns, so far and this is increasing slowly. Over the last 2 / 3 years decided to take some extra risk on shares and using my 80% of returns into some shares that are priced low in well known companies.

One was trading at 35p now trading at 54p and hope it hits £1.

Another that was trading around 60p is now at 130p but did hit 160p.

I am down on one 167p and today 106p, guess it is going to be long term.

Now I have 60% cash 40% shares ( something like that), using funds copying the MSCI World index and a few other index.
Going to cash in most of shares soon and apart from the one that I am down on.

My plan fill 75% of my total pension pot, and let it fill out with little external income.
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Will you not get to the point where you have huge wealth in your SIPP but no other wealth and be stuck in that situation for some years until you can access it?
 
Jack_green said:
Eventually it services itself. Also you can buy properties in a sipp to rent out.
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If you fill up your SIPP paying no income tax and then stop contributing, from then on won't you be paying income tax on your full salary? So you've lost the opportunity to keep yourself under higher or top rate thresholds and so you may end up being even less tax efficient than a "normal" contribution strategy. Also I assume this strategy has led to you being very behind on becoming a homeowner?

It's an interesting strategy and point of view, but it seems like there might be a few holes in it.
 
EvilRob said:
If you fill up your SIPP paying no income tax and then stop contributing, from then on won't you be paying income tax on your full salary? So you've lost the opportunity to keep yourself under higher or top rate thresholds and so you may end up being even less tax efficient than a "normal" contribution strategy. Also I assume this strategy has led to you being very behind on becoming a homeowner?

It's an interesting strategy and point of view, but it seems like there might be a few holes in it.
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Once you've reached where you need to be in your pension you could then probably look at getting a different job which pays less and has less responsbility and pressure so you gain by being able to earn less but not be massively worse off due to not having to contribute as much to a pension and the additional benefit of the additional growth from time in market which brings the time to retire/change job closer as well.
 
I'm contributing a bit more than I'd like to my pension atm, due to the current tax situation (fiscal drag), with the hope that at some point the brackets get corrected (or imo binned off entirely in favour of a single rate of income tax).
 
OldKitMan said:
Once you've reached where you need to be in your pension you could then probably look at getting a different job which pays less and has less responsbility and pressure so you gain by being able to earn less but not be massively worse off due to not having to contribute as much to a pension and the additional benefit of the additional growth from time in market which brings the time to retire/change job closer as well.
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Agree in general but in this scenario (living at home, only taking home £12,570 a year for many years to build up pension) surely you will need to switch building up assets outside pension also. Unless the strategy is continue living with parents until they die and then inherit their house.
 
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Jack_green said:
Maybe I should have explain it better.

When I started earning 25k after I graduated. It think took me about 6 years to get to my first 90k. I paid in nearly all my taxable income to my pension, I did have and extra £50 or so a month over my taxe free allowance.

Then compound interest took over and I reduced my wage funding by the interest.

A few years later I stopped working, 6 years I bummed around.
My pension was already contributing around 5k plus a year on its own.

I started to work again earning 30k, now I reduced my direct funding by my interest per year so my take home pay was about 18k. I did that for a few years the more I earned the less I funded directly. I made sure that the pension growth and wage would combine would be the difference between tax free and rest of my income.
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Were you living with parents or some other method that allowed you to save nearly all of your take home for 6 years then bum around for 6 years? :confused:

What were your actual outgoings for those 12 years and how were they funded? :confused:
 
Jack_green said:
Living with family for the first 6.5 years of my working history. The crash came, company went bust. Still lived with family, no outgoings apart from mobile contract so the tax free allowance is more than enough. But I did pay income taxes on £50 to £100 a month which were pretty low.
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Did you not have a life?

Jack_green said:
Maybe I should have explain it better.

You don't do it forever, like I said in my post, eventually you slow down hitting your tax allowance band.Let me detail how I did it.
I eventually let compounding assist me.

When I started earning 25k after I graduated. It think took me about 6 years to get to my first 90k. I paid in nearly all my taxable income to my pension, I did have and extra £50 or so a month over my taxe free allowance.

Then compound interest took over and I reduced my wage funding by the interest.

A few years later I stopped working, 6 years I bummed around.
My pension was already contributing around 5k plus a year on its own.

I started to work again earning 30k, now I reduced my direct funding by my interest per year so my take home pay was about 18k. I did that for a few years the more I earned the less I funded directly. I made sure that the pension growth and wage would combine would be the difference between tax free and rest of my income.

My wage was growing by my interest in my pension. You might say I wasn't using all my allowance, but for good reason. Sure you can picture it now.

I took another few years off, pension still grew.
Then I went back to work.

Eventually I had to change tactics.

My pension was growing faster than I would have thought and my income as well.

Now Iam putting in only higher tax earnings a bit of my lower tax earnings ( gradually this is less and less as income grows but banding does not). This takes In to account my fiscal drag.

I am bit annoyed they aren't going to increase the bands until 28.

By doing it this way I don't get mugged if I have savings over the allowed rate if I need to sign on, if I lose my job. My savings account is my pension.

The idea was, get to 54 extract my 25% and buy a place abroad outright and retire. Rent out our place and spilt the rent, or use the other portion of the pension allowance that is still available to put the surplus rent into. This was one option.

We purchased a house together using my lower rate of tax and her wage, advance inheritance from her side.

I used goal seek to optimise my funding strategy.

So you don't live the whole 20 years on your base.
You take into account your portion of yearly pension growth and wage.

The first years off fully funding my pension provide me with a bloody great base and start.
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I'm confused by this.

Also how do you buy a property inside your pension fund? Why doesn't everyone do that rather than have a mortgage?
 
It's called coastFIRE iirc. And some sipps allow you to buy commercial properties or something. My friend at work owns a pub within his sipp and all the gains are paid into it tax free.
 
413x said:
I believe my total pension pot is only... 70k..I'm 38... RiP retirement! :D
I think I've found them all.


Oh. Just an FYI.
I forgot about a big one.. A 44k one. And one of the details was "beneficiaries" and it was listed as my ex! :D

Obviously I set it up at the time, didn't think much of it.. Never changed it.

Make sure you check this! :D
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You have loads of time. Compounding is magic. I want to retire (well work part-time) in 4 years so am in a mad panic stuffing as much into pension/investments/ISA/savings as possible. I have "enough" but still worry a lot!

https://www.guiide.co.uk/ is a good place to look to see how things could work out especially for drawdown.
 
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413x said:
Looks like the average UK pension pot at retirement is 70k!

Thats shocking.

With home ownership falling, pension age increasing, future is going to be really grim for many.
I guess if you can work you'll just have to.
And if you can't? I guess it's a life in benefits. Can't imagine what the benefits Bill is going to end up at.

I'm guessing not good!
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I’ve wondered about this stat too. Could this number be a bit confused because of the amount of people with DB pensions retiring. The value of the DB pension may not appear in this stat or may not be converted to its true value to make it comparable to a DC (20x).
 
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EvilRob said:
Is it though? I'd say it's not awful. It might be more than many, but many are also going to have a pretty ****** retirement.
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Its not great. It's not awful. It's a tad scary it may be above average for my age.

delta0 said:
I’ve wondered about this stat too. Could this number be a bit confused because of the amount of people with DB pensions retiring. The value of the DB pension may not appear in this stat or may not be converted to its true value to make it comparable to a DC (20x).
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Yeah one of those the details of the calculation matters.
 
Narj said:
You have loads of time. Compounding is magic. I want to retire (well work part-time) in 4 years so am in a mad panic stuffing as much into pension/investments/ISA/savings as possible. I have "enough" but still worry a lot!

https://www.guiide.co.uk/ is a good place to look to see how things could work out especially for drawdown.
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For myself after the mortgage is gone I'd like to cut my days. I'd rather a 4,3,2,1,0 days a week type of tapering to retire.
I certainly don't want to go from 5 days a week to 0. Then have to live frugally for rest of my days.

I'd probably rather work. 6.months of the year tbh. It's possible if I can go contract this can happen much sooner. It is a goal.

I'm saving 500-600 a month into my pension (that's total. Me + employer) and into my isa. Probably about 750 a month into that.

Why more into isa? I'm probably going to need it for next house move and emergencies etc.
 
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