Omega Owners Forum
Chat Area => General Discussion Area => Topic started by: Rog on 19 May 2014, 18:01:09
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Articles like this make me laugh, they bring to mind the expectation that many in the state sector and big corporate world have of a "final salary" pension. I find it very odd that a person can expect to earn the same when they are retired and non-productive, as they did when they were working.
http://www.bbc.co.uk/news/business-27441009
I have no idea what my income will be after retirement in a few years. Somewhere between £15k and £40k as in the article would be nice, but . . . . . I wonder if whoever wrote the article was a financial advisor ?
I'm sure Rods2 will have something to say ::)
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I read that too.
The thing is that the governments of the day have been banging on long enough now about everyone should be saving towards a private pension (to save the state having to give OAP's a decent pension). There can't be anyone who isn't saving for their future unless they have taken a conscious decision not to.
By the way Britain is one of the richest countries on the planet and in the EU but has the worst state pension level of any EU country. Not good after people have worked all their lives and paid taxes- then to be means tested to get extra handouts to survive..
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I read that too.
The thing is that the governments of the day have been banging on long enough now about everyone should be saving towards a private pension (to save the state having to give OAP's a decent pension). There can't be anyone who isn't saving for their future unless they have taken a conscious decision not to.
By the way Britain is one of the richest countries on the planet and in the EU but has the worst state pension level of any EU country. Not good after people have worked all their lives and paid taxes- then to be means tested to get extra handouts to survive..
An accurate statement as far as it goes, but nicely hides some important facts that need to be considered if an HONEST approach is taken ... :)
Just to throw in a few points .... free eye tests, free prescriptions, free hearing tests, free NHS treatment that can include glasses, hearing aids and numerous "disability aids". "Meals on wheels" and other social support for those elderly who live at home etc etc etc .... :)
All of which are CHARGED FOR in the other countries of the EU ... AFAIK .. :)
Lets at least compare apples with apples ???? .. and not apples with cabbages ??? :)
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If only I could afford to retire now... ...I wouldn't even bother going in to crap on the boss's desk.
Sadly, like many others from my generation, I expect to work to 70 :'(
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If only I could afford to retire now... ...I wouldn't even bother going in to crap on the boss's desk.
Sadly, like many others from my generation, I expect to work till I drop! :'(
Fixed that for you TB. ;)
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I don't have a pension. :-\
Too late now. :'(
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If only I could afford to retire now... ...I wouldn't even bother going in to crap on the boss's desk.
Sadly, like many others from my generation, I expect to work till I drop! :'(
Fixed that for you TB. ;)
Well, true...
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Not good after people have worked all their lives and paid taxes...
and consistently voted in governments who have pi55ed all that tax money up the wall. There is NO government "state pension fund". It's all payed out of current taxation/NI contributions. The "I've payed in all my life" argument just reveals people don't understand what they're been paying for and how the state pension works. The proportion of people working vs pensioners is decreasing - so fewer people are paying more to fund more pensioners. And those tax payers are the graduates of this generation who have had their university fees increased by the people who now demand their state pensions. There is trouble brewing.
The facts are that from here on the state pension can only ever be at or just above subsistence level. If you want to live on this (approx £7500 a year) in your retirement (which won't be till age 70 BTW!), then that's your choice. If not you must make plans to set aside enough money during your working life to fund your expectations. To get £15K in retirement you need to have saved a pension pot to pay out the additional £7500. That means a pot of at least £150K. If you want to retire on £20Kpa at age 55, then your pot needs to be more like £600K.
The govenment plans a good, but don't go far enough. Rule of thumb is that you need to put in half your age when you start saving as a percentage of your earning. If you start at 20, that means 10% of earnings. If you start at age 40, then 20%. The current govenment legislation is currently only 8%. Better than nothing, but not enough.
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We had the best funded pensions until 1997, when Gordon McRuin decided a £7bn a year tax grab wouldn't be missed, so pensions have lost income and growth since then which adds up to about £200bn or upwards of £10,000 per pensioner, which the governments have just pissed away and we now have the worst funded in Europe. :( :( :(
The is why McRuin introduced workplace pensions, where he had stolen the legacy that people expected from their investments, not only in this tax grab, but also his disastrous economic policies. The workplace pensions won't provide an adequate pension for the vast majority.
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.
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I did the opposite to you Rods, when my firm closed their final salary scheme and went for a 'money purchase' instead
i decided to stay in Serps. My state pension now pays me more than i was getting before i retired. I also have a small
private pension which isn,t a lot but helps top up the state one. Swings and roundabouts i suppose. :-\
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Pension? I'll be lucky if they don't wheel me away from my desk and straight into the casket..
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Unless you are really stinking rich, I suppose the real answer is not to have any cash or savings, and not to have any job or idependant income, and not to own property. The state will then cough up and support you for life.
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I agree with you Rog.
The middle of the road is no choice as (has been the case with so many relatives) having a small private pension on top of your state pension bars you from all kinds of state relief.
So in my view you either
Spend all your surplus money while you can enjoy it and hope that by state retirement age there will be a safety net still
OR
Invest heavily every year and hope you live long enough after retirement to enjoy it.
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Unless you are really stinking rich, I suppose the real answer is not to have any cash or savings, and not to have any job or idependant income, and not to own property. The state will then cough up and support you for life.
Yes, Rog.......but not very well. You won't be living the high life that's for sure. :'( :'(
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Unless you are really stinking rich, I suppose the real answer is not to have any cash or savings, and not to have any job or idependant income, and not to own property. The state will then cough up and support you for life.
Yes, Rog.......but not very well. You won't be living the high life that's for sure. :'( :'(
Won't make any difference to you, unless you give up the drink and drugs. :P
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Pension? I'll be lucky if they don't wheel me away from my desk and straight into the casket..
ditto.....
I expect my coffin to be made of cardboard. :'( :'(
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
Indeed. But being as prepared as I can. This plus sharesave schemes about best I can do
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
are you doing this via salary sacrifice? - if so remember your employer saves NI as a result and some will share that saving with you.
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
Indeed. But being as prepared as I can. This plus sharesave schemes about best I can do
Give your monthly pension contribution to me. I will 'invest' it for you and, if I don't give you a brilliant return when you're 60, you can kill me. :y
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
are you doing this via salary sacrifice? - if so remember your employer saves NI as a result and some will share that saving with you.
Yes. 8% sacrifice, 8% from Sky :)
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
Indeed. But being as prepared as I can. This plus sharesave schemes about best I can do
Give your monthly pension contribution to me. I will 'invest' it for you and, if I don't give you a brilliant return when you're 60, you can kill me. :y
Can I ask for a return on investment next week? :P
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
Indeed. But being as prepared as I can. This plus sharesave schemes about best I can do
Give your monthly pension contribution to me. I will 'invest' it for you and, if I don't give you a brilliant return when you're 60, you can kill me. :y
Can I ask for a return on investment next week? :P
Sorry. It's a long term investment.
Take it or leave...ungrateful brat. >:(
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So rent the house out, move back in with the parents, and invest the rental income equally into pharmaceuticals and military hardware companies... should cover most eventualities :-\
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I expect my coffin to be made of cardboard. :'( :'(
That dosn't matter as you won't care at the time! ;)
Somethings gone wrong here..... :-\
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
It's hard to take into account all the eventualities that may occur over you working life. For instance, President Putin could cock your pension up big time. ;D
Indeed. But being as prepared as I can. This plus sharesave schemes about best I can do
Give your monthly pension contribution to me. I will 'invest' it for you and, if I don't give you a brilliant return when you're 60, you can kill me. :y
Can I ask for a return on investment next week? :P
Sorry. It's a long term investment.
Take it or leave...ungrateful brat. >:(
;D ;D ;D
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I have a pensions gov forecast that seems to say that the SERPS abolition in a couple of years will not affect my pension benefits as have been in SERPS throughout. Hope this is correct as it would be extremely naughty if those near retirement like me were deprived of those benefits when new single tier pension comes in. Fortunately I do have 2 private pensions as well.
I will probably keep working in any case as job is interesting and I have a lot of flexibility which is necessary with elderly family issues.
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I have a pensions gov forecast that seems to say that the SERPS abolition in a couple of years will not affect my pension benefits as have been in SERPS throughout. Hope this is correct as it would be extremely naughty if those near retirement like me were deprived of those benefits when new single tier pension comes in. Fortunately I do have 2 private pensions as well.
I will probably keep working in any case as job is interesting and I have a lot of flexibility which is necessary with elderly family issues.
When the new flat rate pension scheme starts in 2015/6, they will calculate what your entitlement is under the old scheme - it's called the foundation amount. Then when you retire, you will get whichever is greater - the foundation amount, or the new flat rate. The basic state pension is currently £110 ish per week. SERPS/S2P is paid in addition to this. People close to retirement with decent SERPS/S2P are likley to have quite large SERPS/S2P which can in some cases efectively double this amount to over £200 p/w.
The flat rate system is actually stealing from the young (under 30's) to fund the SERPS of the older generation (50+). There is no "serps" after 2015/6 - it's just flat rate of £140 ish built up over 35 years - so about £4 per week per year of NI contributions you make. If you don't start work till after 2016, then the max you can ever get is £140 p/w.
I'm going to be a winner from all this, but I believe the system is overly generous to my generation.
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As a younger worker pensions are already on my mind, if things go well this summer I'll be increasing my contributions to 20% per month.
They have an online calculator showing expected pension, based on what's going in. Scary stuff :o
Good on you. It's not a sexy or popular thing to save in a pension, but you will have the last laugh when the nay-sayers are all eating cold baked beans in their old age.
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.
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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.
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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.
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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
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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..
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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.
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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.
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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.
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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....
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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..
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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!
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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.
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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.
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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 :-\
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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 !!
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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 ;)
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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
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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 !!
If you ask a finacial advisor you are likely to get duff advice. If you ask a INDEPENDENT finacial advisor, you are much more likely to get good advice.
You obviously don't understand what a modern (non final salary) pension is. They have nothing to do with insurance or pension companies. They are simply a tax free wrapper within which you can hold a virtually unlimited number of different assets.
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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
Thanks :y
Sky does have pension calculator too, been fiddling with that. Sky match up to 8% the system starts with you putting in 4%, them 8%. (now reduced to 6%, luckily I'm on the old scheme) I doubled mine, however after that, they continue at 8%, so my plan is to put in 12% myself + 8 from Sky. I also pay in the additional thing government put in last year? I did not opt out...
I also save via Sharesave scheme, currently they are doing very well, I have a number of them. Option price when I bought in, £5.03 share price hovers around £9 currently. Should be doubling my money hopefully! I save around £150/m on those (£50 per pot so to speak)
I just checked what I put funds wise each month into pension pot, I'm not far off that, so with my planned increases I should be on that roughly.
I could be doing better, but I think I'm in ok-ish shape, my main issue is i'm 29, I only really started paying in at 25. My first job out of Uni had no pension setups really.
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Thanks :y
Sky does have pension calculator too, been fiddling with that. Sky match up to 8% the system starts with you putting in 4%, them 8%. (now reduced to 6%, luckily I'm on the old scheme) I doubled mine, however after that, they continue at 8%, so my plan is to put in 12% myself + 8 from Sky. I also pay in the additional thing government put in last year? I did not opt out...
I also save via Sharesave scheme, currently they are doing very well, I have a number of them. Option price when I bought in, £5.03 share price hovers around £9 currently. Should be doubling my money hopefully! I save around £150/m on those (£50 per pot so to speak)
I just checked what I put funds wise each month into pension pot, I'm not far off that, so with my planned increases I should be on that roughly.
I could be doing better, but I think I'm in ok-ish shape, my main issue is i'm 29, I only really started paying in at 25. My first job out of Uni had no pension setups really.
Another rule of thumb is to have a pension pot of £35K by the time you're 35. If you're on target for that, then I think I'd stick at 8% if that's all Sky will match. Is the sharesave scheme stilll open? If it is I'd be lumping the excess in on that (and hoping not too many people abandon their Sky contracts in favour of extra pension payments ;D )
One of the 'problems' with pension schemes is that you cannot get ANY of the money out till you're 55 (and rising to 57) except if you're about to peg it. This is both good and bad. You can't pi55 it up a wall till you're 55, but on the other hand you can't use it as a deposit for a house, or fund a buisness etc.
So don't go putting all the available money in your pension pot. Keep some of it easily accessible (cash), some in short term investments (fixed term accounts, bonds etc) some in longer term accounts (sharesave, Stocks and shares ISA) and some in your pension.
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That's sound advice. Thanks. I might consider putting more in share save which have far quicker return :)
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Ok, home now and sitting outside a half bottle of Italian red, so a few more thoughts...
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?
No. More like 9% growth per year.
You see, not all the money has been in there for the full 4 years. If you're putting in £100 per month, then over 4 years only £100 has been in there for the full 48 months, £200 for 47 months, £300 for 46 months....£4700 for 1 month and £4800 total now. But your actual fund is npw worth 20% more than than the total you've payed in - £5760. The effect of this drip feeding is that your actual return is double the apparant yearly return. To get the same return from a bank account you'd have to get an interest rate of 10%.
And then there is compounding. In order to get an effective APR equivalent, you have to compound, meaning that you get interest on the interest. This results in a slightly lower effective interest rate. My Excell spreadsheet reckons that to get a 20% increase in value over 48 equal monthly payments, you need a 9.04% growth rate. Inflation is currently 2.5% ish, so you're currently well ahead of the nominal 5% growth rate (after inflation) I suggested you plan for.
Next up, your sharesave scheme. Keep buying any discounted shares that are available, but make sure you sell (most of) them once they are available for you to do so - which is usually after either 3 or 5 years. Few experianced investors would ever invest in only one share - it's far far too risky. To spread the risk you need at least 7-10 shares spread over a diverse range of companies. If you keep piling money into only Sky shares, and never sell any, you become horribly exposed should the Evil Murdock empire ever fall apart. Lots of former employees of big companies (like LLoyds bank, and Northern Rock) diligently saved into the companies share scheemes all their working lives. Then when the banks went belly up in 2007, they lost the lot, because the shares became (almost) worthless. Don't fall into that trap.
Finally, I'm not an IFA, or a FA, or anything else. These are my oppinions, not professional advice. And oppinions are like ar5eholes - everyone has one. ;D