Pensions For Dummies

[muon]

I think these private pensions are all another big scam to line the pockets of the financial industry. There's no real transparency on what they charge to operate the fund and what they invest in.

In the event markets decline you can bet your bottom dollar that their cut won't be effected, they'll put the burden of the loss onto the fund holders.

I know exactly how much the management charges are .

I get the deductions made clearly outlined every statement.

 

[El Pew]

I know exactly how much the management charges are .

I get the deductions made clearly outlined every statement.

Yeah that guy doesn't know what he's talking about. The new KIID regulations mean that all the charges and investments of the fund must be made available in a single document.

I think the biggest problem with pensions is that some people can't be bothered to do even the most basic research to find out how they are going to finance their retirement.

 

[platypus]

My employer doubling my contribution upto 5+10% is what grabbed my attention and got me thinking about it, as that is a big difference compared to the 1+2% I'm on at the moment.

Definitely take advantage of this generous contribution.

 

[norm]

Yeah that guy doesn't know what he's talking about. The new KIID regulations mean that all the charges and investments of the fund must be made available in a single document.

I think the biggest problem with pensions is that some people can't be bothered to do even the most basic research to find out how they are going to finance their retirement.

Just because an arbitrary charge has been attached to a fund does not equal transparency.

And yes I'm a member of a DC pension, with maximum employer contributions, but like how endowment policies before were a total flop blamed on "market conditions" I'm not convinced these investment schemes will perform any different.

 

[Frozennova]

Definitely take advantage of this generous contribution.

Filled the form in and submitted it yesterday evening with the maximum 5% contribution from myself. I'm young but worth planning for the future now than in 20 years time when Im sat there thinking **** I've got nothing for retirement

 

[Tefal]

i have a final salary pension (that people in work keep insisting was stopped years before i joined but i keep getting statements for it, so im thinking maybe they stopped it for a few years then restarted) 1% per year worked of whatever salary you finish on. (basica though not shift rate)

then a match 4% contribution as a second salary. my dad set up a private one for me too that i contribute too but i'm not sure how much that's worth.

overall i feel if i do the OU to get my engineering degree airbus is such a large and diverse company i can find a place to fit me i can stay here the next 40 years and end up on a decent final salary (and until then enjoy the high shift rate of a shop floor fitter) and be quite comfortable when i retire.

 

[Meridian]

Annoyingly the contributions are only calculated on our basic pay and I earn about 30% on top of that by the time bonuses are added into the mix.

This is standard. I doubt ANY pension matches contributions on overtime and the like.

 

[Nitefly]

i have a final salary pension (that people in work keep insisting was stopped years before i joined but i keep getting statements for it, so im thinking maybe they stopped it for a few years then restarted) 1% per year worked of whatever salary you finish on. (basica though not shift rate)

then a match 4% contribution as a second salary. my dad set up a private one for me too that i contribute too but i'm not sure how much that's worth.

overall i feel if i do the OU to get my engineering degree airbus is such a large and diverse company i can find a place to fit me i can stay here the next 40 years and end up on a decent final salary (and until then enjoy the high shift rate of a shop floor fitter) and be quite comfortable when i retire.

Good lord with that final salary scheme I'd probably aim to retire at 50. I'll take my 5% contribution instead

 

[Tefal]

Good lord with that final salary scheme I'd probably aim to retire at 50.

thing is last year i earned 41k (before tax ni etc) but basic salary is only 27k

so ive been here 5 years now, and have just turned 27, so i need to try and elevate the basic salary before retirement.

get an extra day holiday at 10 years, 15 years 20 and 25 years tough

 

[Frozennova]

thing is last year i earned 41k (before tax ni etc) but basic salary is only 27k

so ive been here 5 years now, and have just turned 27, so i need to try and elevate the basic salary before retirement.

get an extra day holiday at 10 years, 15 years 20 and 25 years tough

Same for me last year, basic is 20k, earnt around 28k iirc, basic will be going upto 22k shortly after the new year

 

[Stretch]

Sorry to hijack this thread... but the title seems very apt.

I have just started a new job, and with it comes a pension, which includes what I consider quite generous company contribution of 8%.

However, I've just received the paper work over the weekend, and the illustrated "growth" rates are.

Lower Rate: -3.9%
Middle Rate: -1.0%
Higher Rate: 2.0%

This is inflation adjusted (2.5%), but surly I'm missing something here???

What investment gives a return of -1.4%, even UK gilts yield 0.1-1.5%???

They also take a 0.5% annual fee deduction.

 

[muon]

The illustrated rates are usually referring to historic trends.

Investments can go down in any given year. Normally they give annual performance for each of the last 5 years.

Funds which invested in real estate took a large hit in the past quarter.

Pensions should be invested in equities though, nothing beats equities in the long term.

edit:

It could also represent your personal return for the partial year you were employed. In which case it can understandably be volatile. You need to really check how the underlying portfolio is performing.

 

[Stretch]

I've only been employed at the company for three weeks. How would I go about checking the underlying performance of the portfolio?

My understanding is that the "low" rate is invested in safe investments such as cash, government bonds and fixed term investments i.e. they don't loose value, but don't perform well over the long term.

 

[SPG]

If you have nothing, then the government will look after you it is in the interest of them.

If you have lots then you dont really care.

If you put away a little something and have a pot and its tight, then you will be means tested for the items those that have nothing get without thinking. This is how its going to be in the next 50 years. Oh and kiss goodbye to your house.

 

[muon]

I've only been employed for three weeks. How would I go about checking the underlying performance of the portfolio?

My understanding is that the "low" rate is invested in safe investments such as cash, government bonds and fixed term investments i.e. they don't loose value, but don't perform well over the long term.

Who is your pension provider?

If it is a large company then they should provide you an online portal.

You should be able to control what your pension gets invested in. Investing in such safe assets if you are more than 10 years away from retirement is very bad. It also suggests your management fees are very high turning the returns negative.

The other thing to remember is that if your employer is relatively small, they may not be making the smartest default decisions versus someone that employs thousands.

I'll add a screenshot of all the pension assets I can invest into and the returns in the last 12 months.

edit:

I've redacted my employer specific ones. I'm invested in Blackrock Consensus Fund (default strategy where I work). Below I can get a brochure for any fund. Total charges for the fund selected is 0.207%.

Spoiler

 

[Hagar]

I retire in one year at 65.

I have a final salary scheme which I have been taking since I was 60 and pays 11k per annum this was accrued over 27 years. I also have a pension fund which I started in 2007. This is based on 6% from me and 6% from my employer. Currently the pot is estimated about 100k when I retire which I will draw down at 5k per annum. My pension including state, final salary and drawdown should be about £25k on current values.

 

[Pawnless Endgame]

i have a final salary pension (that people in work keep insisting was stopped years before i joined but i keep getting statements for it, so im thinking maybe they stopped it for a few years then restarted) 1% per year worked of whatever salary you finish on. (basica though not shift rate)

I remember the MOD gave you 1-80th per year worked, so that 40 years equated to half of your final salary. That was some 20 years ago though when I worked there and I was only on a 1-year casual placement so doesn't apply to me. But fair play to you for being with a company that still does it. Thought that was well in the past and don't think the MOD would be paying 1-80th per year worked now

 

[Tefal]

I remember the MOD gave you 1-80th per year worked, so that 40 years equated to half of your final salary. That was some 20 years ago though when I worked there and I was only on a 1-year casual placement so doesn't apply to me. But fair play to you for being with a company that still does it. Thought that was well in the past and don't think the MOD would be paying 1-80th per year worked now

it helps that our order book is now worth over 1 trillion

 

[Tacitus]

I put in the most I need to to get the maximum employer contribution, at the old age of 22.

It maybe doesn't look like a lot, but it'll grow over the next 45-50 years and when I can finally retire, I hope to have enough to do so comfortably. I'm also of the view that by then state pension will be little, if anything, and other benefits currently afforded to the elderly will be gone, so saving for then is quite important.

As for the rest of my cash, I'm trying to put a bit away in an ISA every month to save for a house.

 

[Old Wino]

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