Well you're giving rubbish advice.
What fund do you have that went down 30% in 6 months?
Pensions should be invested in equities and unless you were invested in Russian equities or something, that is simply not possible.
Pensions For Dummies
- Thread starter Frozennova
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Well you're giving rubbish advice.
What fund do you have that went down 30% in 6 months?
Pensions should be invested in equities and unless you were invested in Russian equities or something, that is simply not possible.
what equities are you invested in to be that much down in 6 months? My SIPP has returned 16.29% past 6 months.
Soldato
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And mine the same. Even most managed portfolios will have been balanced in bonds and overseas equities which have benefitted from the sterling devaluation.
It's entirely possible for a fund based on equities to drop that much, although I too am confused what could have dropped that much in the last 6 months - certainly not the FTSE or any of the major indices.
However, drops of this nature are a good thing because it allows you to load up on cheap shares with your monthly contributions. It's always better to buy cheap, so if you're young and contributing to a pension you should be hoping for a drop in share prices so you can pick up some bargains with good long term growth and/or income potential.
Individual past bad experiences should not overshadow the positive steps the industry has taken in the recent years.
Costs and charges are extremely clear on all modern contracts.
Plus as had been stated us lot in our 20s and 30s need to save privately as the state pension won't kick in until around 70. I plan to retire at the latest at 60... Need over 10 years of income to support that goal. Saving now will enable me to do that.
People who fear the state pension won't be there need to calm down. The level it pays out at (Around £7,500) has been made so that you don't fall into benefits. It is also normally setup to be there for around 1/4 of your "life". So average is currently around 88. So it's set at 68. I don't see us living past that tbh so I would be quite surprised if it went beyond 70 with how anti biotics becoming less effective. No harm in planning without it though.
No one ever complains of having saved too much money for retirement.
Hi all.
I only started a pension fund 2 years ago through work. I'm 32. I feel a bit stupid
It's come to light that I'm no where near what I want when I retire. Currently company pays in 3% estimated and I pay in £35 . iv sent a request to up this by another £15, in two months I'll up it again by £15.
So it's around £112-119 going in each month currently
This is the hit that I'm worried about, how much are people aiming to get back per year when they retire ? Projected pension each year worries me a little, if that's a projection. I should be putting more money in ?
Assuming contributions continue to be paid to the plan
Assumed investment return each year: Low. Mid* High
Projected pension fund value: £31,515 £67,190 £144,668
Tax Free Cash: £7,879 £16,798 £36,167
Projected pension each year: £850 £2,399 £6,569
Someone said I'd need to aim to get the projected pension fund value at around £400,000 or more ?
I only started a pension fund 2 years ago through work. I'm 32. I feel a bit stupid
It's come to light that I'm no where near what I want when I retire. Currently company pays in 3% estimated and I pay in £35 . iv sent a request to up this by another £15, in two months I'll up it again by £15.
So it's around £112-119 going in each month currently
This is the hit that I'm worried about, how much are people aiming to get back per year when they retire ? Projected pension each year worries me a little, if that's a projection. I should be putting more money in ?
Assuming contributions continue to be paid to the plan
Assumed investment return each year: Low. Mid* High
Projected pension fund value: £31,515 £67,190 £144,668
Tax Free Cash: £7,879 £16,798 £36,167
Projected pension each year: £850 £2,399 £6,569
Someone said I'd need to aim to get the projected pension fund value at around £400,000 or more ?
It's probably worth speaking to someone about this, an IFA or even just the helpline for your workplace pension (they won't be able to give advice though). Don't forget you'll be entitled to the state pension as well, though my guess would be don't expect it at 67).
Like you I've been given a projected pension income, I have no idea how accurate that projection is and it's based on so many assumptions I don't put much value in it. It's not as high as the figure your someone said. I figure my life expectancy will be so low (I'll be amazed if I make it to 70 frankly) they'll offer me a damn generous annuity however much is in my pot lol, which I'll turn down and take as big a lump sum as possible. Obviously if you are married when you retire that might not be best plan.
Like you I've been given a projected pension income, I have no idea how accurate that projection is and it's based on so many assumptions I don't put much value in it. It's not as high as the figure your someone said. I figure my life expectancy will be so low (I'll be amazed if I make it to 70 frankly) they'll offer me a damn generous annuity however much is in my pot lol, which I'll turn down and take as big a lump sum as possible. Obviously if you are married when you retire that might not be best plan.
Associate
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DLMK4 (my quote button doesnt work!) - you need to determine how much you want your pension income to be at what age
Current annuity rates (yes I know, but they do give a useful target) for retirement at 60 with a surviving spouse pension of 50% are around £4,650 for every £100k you put in, so a £400k pot would give you ~$£18k a year
If you need to increase the income you either pay more in (and the sooner you start that the better), increase the return (tough one without taking more risk), or retire later...or a combo of all 3
Current annuity rates (yes I know, but they do give a useful target) for retirement at 60 with a surviving spouse pension of 50% are around £4,650 for every £100k you put in, so a £400k pot would give you ~$£18k a year
If you need to increase the income you either pay more in (and the sooner you start that the better), increase the return (tough one without taking more risk), or retire later...or a combo of all 3
There's no need to feel stupid.
Stupid would be saving £35 a month and expecting no loss of lifestyle at retirement.
Working in the pension industry can be so frustrating sometimes. Yes - there are lots of rules, restrictions and benefits and yes - pensions can be complex. But for the majority they should be blindingly simple.
They're just a way of saving for something that is a long way off. You get some financial help towards your saving and in return you can't get your money until you're older.
The difficult stuff comes when people start thinking about how much they'll need, which at any age will be a scary amount. There are thousands of media commentators and experts telling you that whatever you do it won't be enough, and that couldn't be a bigger disincentive to bury your head in the sand and wait for another time to deal with it.
The State Pension isn't retirement - it is survival. It'll cover basic bills but not much else. Anything else you want is down to the individual. Not directed at you, but generally: take an interest, work it out and save.
We're saving for retirement as if the state pension won't exist. No real harm in that. If we do end up getting it it'll be a bonus.
Why feel stupid? You've realised you needed to do something about it and have done something about it.
As Scorza said, it really is worth speaking to a financial adviser because they'll be much better positioned to tell you what is best for your situation.
However its true that you've missed out on a lot of years of contributions, and more importantly, compound interest. Any AVCs you can make would be of large benefit to you to try and bolster that pension.
As a very rough guide, you want to take your desired income in retirement and multiply by 20 to workout what your pension pot needs to be, eg if you want £30,000/year, you'll need a pension pot of £600,000. This can of course be slightly changed in your favour if you manage to get a decent annuity, which is roughly £6,000 per £100,00 saved, and to get that income of £30,000 you'd only need a pension pot of £500,000. If you calculate your figures based on lets say a 30 year plan (seems a decent average to take) then you'd need to be saving roughly £600/month to get that kind of pension pot.
Here's the bad news
. If you want a generous income yes you'll need a reasonable pension pot (obviously). However, bear in mind that the average retirment income is just under £16,000, and to get this, you will need a pension pot of nearer £550k. To hit that - based on assumptions I've made about you (these are - no existing pension fund, retiring at current state age of 68) - you will need to invest about £425/month. And that is just to hit the average retirement income. If you want more, obviously you'll need to contribute more. I am not a financial advisor so take this in good faith as it is intended.You've made a start however, and thats the most important part.
I have just received my projected state pension for retirement next year. It will be £148 per week based on the new scheme rules.
It is reduced from the £167 maximum because I was contracted out of the second state pension for a good number of years.
It is based on 47 years of NI contribution, I was working for 46 years of that with approx. one year unemployed in 1980.
It is reduced from the £167 maximum because I was contracted out of the second state pension for a good number of years.
It is based on 47 years of NI contribution, I was working for 46 years of that with approx. one year unemployed in 1980.
Yep, as soon as my employer changed to up to 8% matched, I went the whole hog.
That's 100% return on investment, which pretty much nothing else can give you without significant risk.
I only started a proper pension when I was 30, but prior to that (due to no matched pension from employer) the interest of my debts were higher than anything I'd get from savingings/investments, so it was better for me to clear all of that.
EDIT: All things being equal (retiring at 68, with no pay rises over the next 34 years, and not factoring in interest made on my pension portfolio) I would retire with a £17k p/a pension.
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my employer puts 1 hours pay per month into my pension, yay
I guess that's the minimum workplace pension contribution allowed. At least they're going to increase that over the coming years.
Soldato
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I keep a spreadsheet at work which I use to project my pension. I have a starting pot of 8K and a monthly contribution of £389 PCM, I then have a big long list of months in one column running until I’m 69. Each year I have factored in a liner 2.5% increase in contributions (via pay rises) and an annual return of 5%.
I started this in Sep-14 and my monthly investment return is £34.95 (8000+389 * 0.05/12) which gives me a total pot at the end of the month of 8423.95 (8,000+389+34.95) which gets rolled forward into the next month. The total value of the pension is the interesting part by the time I get to 69 my investment returns are 2,872 each month with a total pot of 692,300.21 (not adjusted for inflation) the effect of compound interest/returns in staggering in the last year alone the value goes up 44k.
Of course this is pure speculation that I’m able to achieve at least 5% return each year which should be achievable using higher risk strategies but by the time I’m 59 I might look to mitigate my expose and put my investments into lower risk investments like government bonds. It also assume no gaps in employment and my employers contributions stay the same (they will nerf it at some point I’m sure).
I started this in Sep-14 and my monthly investment return is £34.95 (8000+389 * 0.05/12) which gives me a total pot at the end of the month of 8423.95 (8,000+389+34.95) which gets rolled forward into the next month. The total value of the pension is the interesting part by the time I get to 69 my investment returns are 2,872 each month with a total pot of 692,300.21 (not adjusted for inflation) the effect of compound interest/returns in staggering in the last year alone the value goes up 44k.
Of course this is pure speculation that I’m able to achieve at least 5% return each year which should be achievable using higher risk strategies but by the time I’m 59 I might look to mitigate my expose and put my investments into lower risk investments like government bonds. It also assume no gaps in employment and my employers contributions stay the same (they will nerf it at some point I’m sure).
Thanks for the info all,
Iv already spoken to HR to get in increased slightly, im going to aim to increase every quarter by a bit
Once my house has been purchased which is what I am saving for at the moment there will be some more focus around long term saving, and pension.
To be honest I don't mind working a few extra years if need be, if work is around, keep me occupied
Iv already spoken to HR to get in increased slightly, im going to aim to increase every quarter by a bit
Once my house has been purchased which is what I am saving for at the moment there will be some more focus around long term saving, and pension.
To be honest I don't mind working a few extra years if need be, if work is around, keep me occupied
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As a few have said, it's all a guessing game. I started a pension when I was 20yrs old, so have 23yrs in that private pension. I've only recently taken an interest in looking at how it is managed. For the 23yrs my current investment 'pot' is £70k so not a massive pot.
Have also got an NHS pension which is 12.5% contribution with 14% employer contribution. It was until recently a final salary scheme, so I've got 10yrs in that, but was changed into a career average unless you met certain criteria. Not sure what that means to me just yet, though the financial adviser I work with now has said it should be a good pension if I stay employed by the NHS for another 25yrs........
Have also got an NHS pension which is 12.5% contribution with 14% employer contribution. It was until recently a final salary scheme, so I've got 10yrs in that, but was changed into a career average unless you met certain criteria. Not sure what that means to me just yet, though the financial adviser I work with now has said it should be a good pension if I stay employed by the NHS for another 25yrs........