Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[LC0112G]

Yes. 8% sacrifice, 8% from Sky

Or more accuratley... 8% from Sky, 5.36% from you, 2.64% from the tax man (NI+Tax saved)

So for every £1 reduction in your take home pay, almost £3 is put into your pension pot. Yet I'm sure there are people your age turning down this free money.

[aaronjb]

I know plenty of people who pay £40 per month for Sky TV, and similar amounts for their mobile phones. Yet they won't save/invest that £100 per month in a pension for their old age.

£100/mo, even assume you started at 17, is unlikely to provide much of a retirement pension though.. Three, four times that, perhaps.

For some folks that's impossible - my other half, for example, couldn't afford to put a third of her income into a pension if it wasn't for the fact that she's living with me.

[LC0112G]

Best thing I did was opting out of Serps as it was progressively neutered and finally scrapped as part of the minimum £140 per week this government, so at least I got an invested lump of money from this. The worst thing I did was invest a lot of money over the years into a pension, to see a large percentage disappear in real terms over the last 15 years, the only people that have done well have been financial crooks advisers with their commissions and fees. I did look in the early 1990's at buy to let and should have gone that route I would have been much better off.

Biggest lesson to me is invest tax paid money, so you are in control and if necessary you can move it outside of the reach of the bunch of crooks in Westminster.

Disagree with some of that. I also opted out of SERPS in 1989, and now have a tidy sum growing nicely. Average growth over the past 10 years has been 8%, and it's not in anything special. I actually wish I'd remained opted out till last year, but I opted back in in 2008.

BTL is a high risk eggs all in one basket option. It can be made to work, but at the end of it you've potentially got a 40% tax bill that investments in the pension won't have (Capital gains tax). Most advisors will tell you that for a BTL to work as a buisness, you need 6-8 houses. Excepting BTL, you can buy the same assets within the pension wrapper as you can outside it. And recently announced changes mean you can withdraw all your money from a pension once you reach 55 years old (although this is unlikely to be a wise thing to do).

Point is, people need to be saving/investing for their old age. If you start early enough (in your teens/20's), there is a realistic chance of retiring at 55. Leave it till your 40's, and you'll be working till state retirement age (70 and rising). After your 40's you'll be working till you drop

[aaronjb]

8% is very healthy growth for a pension.. must be a well managed fund;  the one I have via work has grown at about 3.5% over the last year - the money is split between three schemes, one grew 4%, the other 2.8% and the third one has negative growth that averages out to 0% over the last 12 months..

I've been putting in 8% (and my employer 5%) since my late 20s and if I retire at 65 stand to see a pension of (in todays terms) £20k taking inflation into account; not taking inflation into account it's £8k.

I can't imagine retiring on that..

[edit] I take that back - checking the figures again, if it grows at ~4% per year I'll retire on (in todays terms) £8k. Yup, my £800/mo contributions seem very worthwhile, now..

[Rog]

I know plenty of people who pay £40 per month for Sky TV, and similar amounts for their mobile phones. Yet they won't save/invest that £100 per month in a pension for their old age.

£100/mo, even assume you started at 17, is unlikely to provide much of a retirement pension though.. Three, four times that, perhaps.

For some folks that's impossible - my other half, for example, couldn't afford to put a third of her income into a pension if it wasn't for the fact that she's living with me.

Thats just the point. For years the finance gurus and crooks Independant Financial Advisors have been telling us to cough up large chunks of our income for their our retirement, but the fact is that it is just not feasible unless you live like a hermit.

 

[LC0112G]

I know plenty of people who pay £40 per month for Sky TV, and similar amounts for their mobile phones. Yet they won't save/invest that £100 per month in a pension for their old age.

£100/mo, even assume you started at 17, is unlikely to provide much of a retirement pension though.. Three, four times that, perhaps.

My point was that many people sepnd £100 per month on 'lifestyle choices' and make no provision for their lifestyle in retirement. They're in for a shock when (if !) they retire.

Yes £100 isn't enough - which is why the govenment plans enforce company contributions. So for every £100 deducted from your pay packet, you get £25 tax and £75 company contribution, so doubling your money. 

For some folks that's impossible - my other half, for example, couldn't afford to put a third of her income into a pension if it wasn't for the fact that she's living with me.

I understand that. However, the law allows you to contribute to her pension - up to 2880 p/a - and the government will top that up to £3600 p/a. Not sure I'd do it unless you're married though. And the law also states that she will be opted into a company pension within the next few years (if not already), and that will eventually amount to 8% of her salary.

[jonathanh]

And the law also states that she will be opted into a company pension within the next few years (if not already), and that will eventually amount to 8% of her salary.

Not quite I'm afraid.  If she earns more than £10k pa ( pro-rate over a pay period) then she must be automatically enrolled in a scheme her employer contributes to.  If she earns £5772 to £10k then she must be given access but no need to be automatically enrolled.  If she earns less than £5772 - then no workplace pension. 

[tunnie]

8% is very healthy growth for a pension.. must be a well managed fund;  the one I have via work has grown at about 3.5% over the last year - the money is split between three schemes, one grew 4%, the other 2.8% and the third one has negative growth that averages out to 0% over the last 12 months..

I've been putting in 8% (and my employer 5%) since my late 20s and if I retire at 65 stand to see a pension of (in todays terms) £20k taking inflation into account; not taking inflation into account it's £8k.

I can't imagine retiring on that..

[edit] I take that back - checking the figures again, if it grows at ~4% per year I'll retire on (in todays terms) £8k. Yup, my £800/mo contributions seem very worthwhile, now..

Sounds very similar to mine, plan to up mine a bit, this year, in-fact within coming weeks I hope to pay off my student loan. So I'll be £250 better off a month which is nice. If I get a pay rise, then 100% of that will go into my increased pension contributions. As the lack of student loan payments will be my pay rise, so I won't notice the a few% extra.

I must log in and see what the figures are....

[LC0112G]

8% is very healthy growth for a pension.. must be a well managed fund;

Nope - Bog standard Prudential With Profits plan, started in 1989. Last 10 years returns on the opted out SERPS bit  have been 15.03%, 14.83%, 18.20%, 15.58%, 1.58%, 3.15%, 9.57%, 11.71%, 5.79%, 7.54%. With Profits aren't used much any more (for good reasons), but as a low risk fire and forget I like it.

the one I have via work has grown at about 3.5% over the last year - the money is split between three schemes, one grew 4%, the other 2.8% and the third one has negative growth that averages out to 0% over the last 12 months..

Assuming these aren't final salary schemes, if the total value of all your schemes comes to more than about £50K, then it's usually worth seeing an IFA. It MUST be an IFA (IDEPENDENT FINACIAL ADVISOR)- not a bank or building society Financial adviser. They will assess your attitude to risk, and the charges on these schemes and advise you of any changes they think you should make. Their job is NOT to "pick winners" - Their job is to tailor a portfolio of funds which is likely to meet your aims whilst remaining within your tolerance for risk. You will pay for this advice, but, they can usually spot poor value schemes (high charges) and get you into lower cost ones.

I've been putting in 8% (and my employer 5%) since my late 20s and if I retire at 65 stand to see a pension of (in todays terms) £20k taking inflation into account; not taking inflation into account it's £8k...
[edit] I take that back - checking the figures again, if it grows at ~4% per year I'll retire on (in todays terms) £8k. Yup, my £800/mo contributions seem very worthwhile, now..

You're probably referring to the pension illustration, which by law has to conform to certain assumptions which may or may not be applicable to you. They are not saying you WILL get these amounts - they're saying you MIGHT - if, if, if, if etc. You need to check the assumptions - 50% surviving spouse, increasing by RPI/CPI etc, all have huge effects on the payout. Historically 4% growth before inflation is low. Most would use 8% growth and 3% inflation, so 5% effective overall. £800 per month from age 20 to age 67 and you'd end up with a pot of over £1.75 million. If you don't start till 30 that comes down to £1 million.  If you don't start till 40 that comes down to £540K. So each 10 years delay almost halves your pension.

What you do with your pot at retirement is up to you. You could take the lot as a lump sum (although the tax man will take a heafty wedge 50%), and p155 it up a wall if you want. Or invest it sesnsibly, and take a low risk return of 3-4% p/a, and an anual income of circa £30-£40K isn't out of the question.

I can't imagine retiring on that..
..

Well do something about it! Either increase your contributions, or start saving/investing (in a Stocks and shares ISA), otherwise you WILL be retiring on it!

[LC0112G]

And the law also states that she will be opted into a company pension within the next few years (if not already), and that will eventually amount to 8% of her salary.

Not quite I'm afraid.  If she earns more than £10k pa ( pro-rate over a pay period) then she must be automatically enrolled in a scheme her employer contributes to.  If she earns £5772 to £10k then she must be given access but no need to be automatically enrolled.  If she earns less than £5772 - then no workplace pension.

True. Personally I think it should be compulsary for ALL workers. However £5772 is only 915 hours (22 weeks @ 40 hrs/week) at national minimum wage, so most should/will be covered. 

[LC0112G]

Thats just the point. For years the finance gurus and crooks Independant Financial Advisors have been telling us to cough up large chunks of our income for their our retirement, but the fact is that it is just not feasible unless you live like a hermit.

Yes it is. If you invest £100 (gross, £80 nett) per month (and increase it by inflation each year) for 47 years (20-67), then you should end up with a pot of money worth around £220K at your state retirement age. That should get you an income of around £11K a year, in addition to your £7.5K state pension, so £18K ish total.

Or you can spend £40 a month on sky TV, and £40 on your mobile phone contract (increasing by more than inflation each year!) - and live on £7.5K state pension on it's own.

It really is that simple.

[tunnie]

Hummm, I started my 'proper' pension in 2010 when I joined Sky full time, looking online my fund is around 20% higher than what's paid in.

So ~5% growth year, which looks average?

If I want a £22k /year pension, I need to put in at least 20% myself + what Sky put in. I currently put in 8%, planning to increase that to 12% this year, giving me 20% over-all. But still need to find another 8%.

Think every pay rise for next few years must go into the pension fund 

[2boxerdogs]

Listened to a financial advisor a few weeks ago on the radio, advice was if you have spare cash buy a 2nd property & let it, better option in his opinion much safer than any type of pension his words were there is only one winner that is the insurance/pension companies the  average person has very little hope of getting a fair deal. The wife & I both have NHS & civil service pensions so we will be  fairly comfortable , did think about buying a 2nd house when I received my gratuity last month but decided to spend it on a few decent holidays instead !!

[Rog]

Listened to a financial advisor a few weeks ago on the radio, advice was if you have spare cash buy a 2nd property & let it, better option in his opinion much safer than any type of pension his words were there is only one winner that is the insurance/pension companies the  average person has very little hope of getting a fair deal. The wife & I both have NHS & civil service pensions so we will be  fairly comfortable , did think about buying a 2nd house when I received my gratuity last month but decided to spend it on a few decent holidays instead !!

Nice to hear that as it's exactly what we have done, or will be doing as I am using myself for a while. And as it's in London it should appreciate in value, and yes I know about CGT.

A gratuity that's enough to buy a house ? I'm impressed 

[LC0112G]

Hummm, I started my 'proper' pension in 2010 when I joined Sky full time, looking online my fund is around 20% higher than what's paid in.

So ~5% growth year, which looks average?

If I want a £22k /year pension, I need to put in at least 20% myself + what Sky put in. I currently put in 8%, planning to increase that to 12% this year, giving me 20% over-all. But still need to find another 8%.

Think every pay rise for next few years must go into the pension fund 

Sorry - too many assumptions there to guess at. - Like your current age, your scheme retirement age, what age you want to retire at, how much income you want in retirement etc.

The usual advice on pension forums is to put in whatever is needed to get the maximum employer contribution. What's the max Sky will match? 8%, 10%? I assume there is a max? After that, the advice is often to save a 6 month salary cash like safety fund (typically in a high paying current account or cash ISA) and after that invest in a Stocks and shares ISA. You may also have to save a deposit for a house and pay for a wedding/kids in your later 20's and 30's.

When I started, there used to be a limit on the amount you could save per year. It was something like 17.5% of salary up to age 25, then 20% from 25-35 IIRC. Also, it's unlikely you'll need as much in retirement as you do whilst working - mortgage will be payed off, and sprogs will have effed off :-) Typical final salary schemes only pay out about half of final salary so that's probably a gooid point to aim for.

Rule of thumb is 5% return (after inflation) on a pension pot - so to get 22K p/a you would need to amass a pot of around £440K (in todays money terms) by the time you decide to retire. So you need to invest around £200 per month for 47 years. Have a play with the pension calculator on the HL web site https://www.hl.co.uk/pensions/interactive-calculators/pension-calculator