Pensions

[SuperMikey]

I've been automatically enrolled into the NEST scheme through work, and was wondering when people started paying into their pensions? I'm 22 and didn't think I would have to start paying in for a while, but is it a sensible idea to chuck twenty quid in each month until I get to the point where I can actually afford to pay for a real pension?

[benjii]

I'm sceptical of the long- term value in the annuity market but if you can afford to put a small amount away each month you might as well. With tax relief and employer's contributions it probably represents value and it's a hassle free process. Your money will go into long-term structured funds and you won't need to make investment "decisions" as such and you will avoid the temptation of saving nothing.

 

No doubt Dune will be on soon saying pensions are for mugs and you should buy shares or some *** will come and tell you that they invest in property instead (like that's an option for most people).

[Bearsy]

can't see a wild living deviant like Mikey ever making it to pension age.

[Goatboy]

I've been automatically enrolled into the NEST scheme through work, and was wondering when people started paying into their pensions? I'm 22 and didn't think I would have to start paying in for a while, but is it a sensible idea to chuck twenty quid in each month until I get to the point where I can actually afford to pay for a real pension?

 

[buctootim]

People (your employer and the Revenue & Customs) want to give you free money. You should take it

[Whitey Grandad]

Yes you should, the soonerer the betterer. If I survive until July I might even get my state pension

[saint si]

You should also consider the implications of compound interest over 40-50 years.

 

In summary - don't wait "a few years" to start paying in, each amount you pay in will be worth more than the next one come retirement.

[hypochondriac]

You should save your own pension rather than using the nest scheme. Source? My accountant.

[CB Saint]

If they are throwing into the pot, take it.

[TopGun]

See if you can change it to a SIPP run by a company like Hargreaves Lansdown. Put in what you can afford into funds recommended by them. You'll do well long term.

[aintforever]

I've just started a similar type of thing at work, makes sense because they chuck some money in as well.

 

Can't help thinking I'm just throwing my cash down the sh!tter tho, there's bound to be another crash soon so I will probably get 20p back for every pound I put in.

[Saint in Paradise]

It is never to early to start saving for your retirement, remember you can never have too much money

when you have stopped working and no longer getting an income from working.

 

Just a point that some might not think of be careful how much you are being charged for management fees

of your money as even 1.5% instead of 1.0% can make a hell of a difference over 40 years or so.

[badgerx16]

.... and was wondering when people started paying into their pensions? ...

 

Joined the LGPS on my first day - 18th Nov 1982. Still paying in.

[sandwichsaint]

Joined the LGPS on my first day - 18th Nov 1982. Still paying in.

 

Bloody public sector gold-plated pensions blah, blah, blah.

 

I'm in it too, but I'll leave the colour of the cladding until I'm 65 and I (hopefully) get some good cold cash in my mitts.

 

 

 

Are pensions worth it? From the perspective of a 52 year old I would say 'always'.

 

Biggest regret? When Adam was a boy (c1981) a row of fairly run-down cottages in my modest Kent village were done up by the local builder (nothing flash by today's standards, indoor bathroom, basic kitchen, new roof etc). I could see they were value for money at c£17,000 a piece - I didn't have a secure enough income for a mortgage or any bank of mum and dad to help me on my way ... they are now for sale at £180,000!

 

Obviously gains of ten-fold don't happen everywhere, they aren't guaranteed boys and girls, and they may never happen again. Not having a mortgage at 20 is equal to a lot of nights out and a lot of Saints games but distance lends a certain perspective, if the govt and your employer are both chucking into your pension pot it would be rude not to wouldn't it?

[Lord Duckhunter]

A good rule of thumb for a defined contribution pension is that you need to put the % of your salary that matches the age you start a pension to get a decent retirement income. So if your 20, then the ideal amount is 20%. If your 35 , then 35%. The problem is that's not really affordable to most working people, and that's why the next generation of pensioners will be poorer than the last.

 

Unless you work in the public sector or are unbelievably lucky, you can thank Gordon Brown and the labour party for ****ing up your retirement. I only pay into our money purchase scheme because I get free money from my employer for doing so, but it ain't going to fund my retirement so need to look at other options. Luckily mrs duck has an NHS pension, so staying the right side of her is one priority.

[so22saint]

do it

[shurlock]

http://www.barnett-waddingham.co.uk/news/2013/08/young-people-who-delay-pension-saving-until-middle-age-could-lose-more-than-half-a-million-pounds/

 

Comparing the value of a pension if one starts saving at 25 versus 40.

[Dark Munster]

A good rule of thumb for a defined contribution pension is that you need to put the % of your salary that matches the age you start a pension to get a decent retirement income. So if your 20, then the ideal amount is 20%. If your 35 , then 35%. The problem is that's not really affordable to most working people, and that's why the next generation of pensioners will be poorer than the last.

 

Unless you work in the public sector or are unbelievably lucky, you can thank Gordon Brown and the labour party for ****ing up your retirement. I only pay into our money purchase scheme because I get free money from my employer for doing so, but it ain't going to fund my retirement so need to look at other options. Luckily mrs duck has an NHS pension, so staying the right side of her is one priority.

If she dumps you aren't you entitled to half of her pension?

[Doctoroncall]

Always tried to put in as much as I can from the start. If you don't see it to begin with you will not miss it and adapt.

 

You'll need to check the pension fund to make sure it's investing strategy is to your liking.

[Barry Sanchez]

Its funny how things can make you get your arse into gear ha ha, just sorted out some pension stuff simply after seeing this!

Edited 5 March, 2014 by Barry Sanchez

[Whitey Grandad]

Its funny how things can make you get your arse into gear ha ha, just sorted out some pension stuff simply after seeing this!

 

Congratulations, but you should know that it's probably a sign of middle age

[Barry Sanchez]

Congratulations, but you should know that it's probably a sign of middle age

 

Ha ha so true.

[scotty]

Always tried to put in as much as I can from the start. If you don't see it to begin with you will not miss it and adapt.

 

You'll need to check the pension fund to make sure it's investing strategy is to your liking.

 

 

At the tender age of 28, and self-employed, I started a pension fund with A***y L**e. I paid in the maximum allowable, taking into consideration back allowances. That amounted to 3 years income in one hit, followed by additional payments over the next few years.

 

 

That was 24 years ago. The fund is now worth less than the investment; not adjusted for inflation, but actual pounds sterling. My advice is that unless you have a cast iron company pension to pay in to, or a civil service one, leave well alone and concentrate on paying off your mortgage. I could (and should) have paid off my mortgage with that money. As it stands, I still owe the lender.

[Barry Sanchez]

At the tender age of 28, and self-employed, I started a pension fund with A***y L**e. I paid in the maximum allowable, taking into consideration back allowances. That amounted to 3 years income in one hit, followed by additional payments over the next few years.

 

 

That was 24 years ago. The fund is now worth less than the investment; not adjusted for inflation, but actual pounds sterling. My advice is that unless you have a cast iron company pension to pay in to, or a civil service one, leave well alone and concentrate on paying off your mortgage. I could (and should) have paid off my mortgage with that money. As it stands, I still owe the lender.

 

Jesus thats crap.

[Barry Sanchez]

I just worked out if I retire at 50 I shall get £75 a week, bonus!

[Doctoroncall]

At the tender age of 28, and self-employed, I started a pension fund with A***y L**e. I paid in the maximum allowable, taking into consideration back allowances. That amounted to 3 years income in one hit, followed by additional payments over the next few years.

 

 

That was 24 years ago. The fund is now worth less than the investment; not adjusted for inflation, but actual pounds sterling. My advice is that unless you have a cast iron company pension to pay in to, or a civil service one, leave well alone and concentrate on paying off your mortgage. I could (and should) have paid off my mortgage with that money. As it stands, I still owe the lender.

 

ouch, that is bad. Unfortunately these days you cannot just hand the money over but need to investigate and make judgements on the information on an annual basis. Sometimes it is worth opting out.

[Kingsbridge Saint]

I can't believe people are being sold the old fashioned crock that is 'retirement'. Everyones working into the grave chaps - might only be part time, but demographics are going to kill passive income streams everywhere.

[tony13579]

Do the works pension, let the boss and the tax man contribute. Also do a SIPP. Invest the SIPP in shares and funds and learn how to invest with smaller sums. Hopefully you can transfer your works pension in later and manage it yourself.

If you are lucky enough to hit the 40% tax bracket invest your highly taxed earnings rather than pay off your mortgage. You should build up enough tax free lump sum to pay the mortgage off.

[GAS]

A good rule of thumb for a defined contribution pension is that you need to put the % of your salary that matches the age you start a pension to get a decent retirement income. So if your 20, then the ideal amount is 20%. If your 35 , then 35%. The problem is that's not really affordable to most working people, and that's why the next generation of pensioners will be poorer than the last.

 

Unless you work in the public sector or are unbelievably lucky, you can thank Gordon Brown and the labour party for ****ing up your retirement. I only pay into our money purchase scheme because I get free money from my employer for doing so, but it ain't going to fund my retirement so need to look at other options. Luckily mrs duck has an NHS pension, so staying the right side of her is one priority.

Yes, and isn't NEST 1% and 2% so even after 30 or 40 yrs of paying in it wont be worth a beer and a burger night in Wetherspoons.

[Whitey Grandad]

Yes, and isn't NEST 1% and 2% so even after 30 or 40 yrs of paying in it wont be worth a beer and a burger night in Wetherspoons.

 

At that age you won't want to.

[lloydie]

Digging this thread up as I was looking into my pension that started through work made up of contributions from both myself and my employer - checking the growth on it as ive been in it a year now and its grown about 1.6% - any idea if this is a good rate of growth, or if I should look at changing the funds i'm invested in? As I have the ability to switch the various funds.

[Bucks Saint]

Digging this thread up as I was looking into my pension that started through work made up of contributions from both myself and my employer - checking the growth on it as ive been in it a year now and its grown about 1.6% - any idea if this is a good rate of growth, or if I should look at changing the funds i'm invested in? As I have the ability to switch the various funds.

 

A few ways of looking at it. That growth is better than virtually any savings account right now, so its decent . On the other hand, compared to some other pension funds, including mine, thats a pretty low return. Two big BUTs though: 1) pension funds are long term savings by nature, and you can only get a sensible view if you look at a 3 or 5 year return overall. There will be ups and downs along the way. 2) What sort of Fund is it? Is it meant to be low risk, which usually means modest returns? And do you get a comparison with any industry average, for that type of fund, which gives you a better idea if yours is doing ok for its type?

 

If you have a long way to go until retirement, and have some choice about which funds, then its best to get a blend of longer term plans with greater potential like UK equity, global equity, commercial property and perhaps things like natural resources. Funds like bonds, money market, gilts etc are all much less volatile but will give lower returns. Advisors usually say spread the funds about, then keep an eye on them each year but try not to change them for 5 years+ unless they are tanking. As you get nearer retirement, switch more of your money gradually into lower risk funds

[lloydie]

A few ways of looking at it. That growth is better than virtually any savings account right now, so its decent . On the other hand, compared to some other pension funds, including mine, thats a pretty low return. Two big BUTs though: 1) pension funds are long term savings by nature, and you can only get a sensible view if you look at a 3 or 5 year return overall. There will be ups and downs along the way. 2) What sort of Fund is it? Is it meant to be low risk, which usually means modest returns? And do you get a comparison with any industry average, for that type of fund, which gives you a better idea if yours is doing ok for its type?

 

If you have a long way to go until retirement, and have some choice about which funds, then its best to get a blend of longer term plans with greater potential like UK equity, global equity, commercial property and perhaps things like natural resources. Funds like bonds, money market, gilts etc are all much less volatile but will give lower returns. Advisors usually say spread the funds about, then keep an eye on them each year but try not to change them for 5 years+ unless they are tanking. As you get nearer retirement, switch more of your money gradually into lower risk funds

 

Thanks for the reply. Intially I had myself at a risk score 6, and had only invested it in a managed fund - matched for that rating (the Old Mutual Spectrum 6 fund) however that started to slide and was proably down about %1 of my contributions, so whilst I havent switched out of it as that money will hopefully pick up again, I have stopped any further contributions going into the fund and am now paying into Invesco Pepetual High Income and the JPM UK strategic growth fund, which so far seem to have have taken me back up to the overal return of 1.6% for the entire account. But yeah I suppose its best to leave it as it is and see where i am within the next 4-5 years from now.

[TwoPints]

Thanks for the reply. Intially I had myself at a risk score 6, and had only invested it in a managed fund - matched for that rating (the Old Mutual Spectrum 6 fund) however that started to slide and was proably down about %1 of my contributions, so whilst I havent switched out of it as that money will hopefully pick up again, I have stopped any further contributions going into the fund and am now paying into Invesco Pepetual High Income and the JPM UK strategic growth fund, which so far seem to have have taken me back up to the overal return of 1.6% for the entire account. But yeah I suppose its best to leave it as it is and see where i am within the next 4-5 years from now.

I've gone a bit Asia Pacific with a small amount of mine but that's higher risk than the UK equities that you're in (hence the reason that I've only put a small amount in there). Doing Ok at the moment but with a riskier fund there's chance of a steep downturn at some stage. As long as you're able to ride out the troughs and not need to take it out when the markets are low you can manage the risk to some extent. Apart from that, the funds you've mentioned are as good as any in those sectors I guess.

[Wade Garrett]

Successive Governments should have made if a lot harder for businesses to close final salary schemes. At the very least they should have offered incentives to firms to keep them open.

 

Gordon Brown's decision to hit the pension funds with nothing more than a windfall tax was a catastrophic error in judgement. Still, I don't suppose the decision personally affected the upstanding members of parliament. Almost as crooked as FIFA.

[nathan]

Obviously I have a vested interest as it's the industry I work in but this website may help with a few of the queries raised on here: https://finances.oldmutualwealth.co.uk/PortalClient/.

[Baldbarbarian]

Digging this thread up as I was looking into my pension that started through work made up of contributions from both myself and my employer - checking the growth on it as ive been in it a year now and its grown about 1.6% - any idea if this is a good rate of growth, or if I should look at changing the funds i'm invested in? As I have the ability to switch the various funds.

 

I work with pensions myself. I have a SIPP with Hargreaves Lansdown which I deal myself.

I have basically picked an OBSR Model Portfolio (google it) which best fits my attitude to investment risk, & copied the funds with my pension (why do the hard work when someone else has done the research for me) Everytime they update it which is usually quarterly I update my pension funds to match it.

 

Its obviously a long term thing but I am currently running at about 16% return for the year.

 

I am currently studying for pensions exam which I take next monday.

[Smirking_Saint]

I think personally its a good idea to invest, at the end of the day if your are getting contributions from the taxman and your empoyer then why not ? Do any of us know what the future holds ? Not yet, maybe there will be a crash, maybe not. All I can do is speculate that the pension I am putting money in to will be enough when I retire.

 

Ive been paying in since I started with my company 7 years ago now, I also pay into the sharesave and SIPs schemes that they run at work, as realistically that will be worth more than my pension in the future.

 

I also made the decision to buy a house at 20, it was hard being on the bones of my arse at that age but its worked out, Ive been able to upgrade twice now and happy in the home I bought 4 weeks ago now.

 

Nobody knows the right answer, but I think its worth speculating at least a bit into your future

[Bucks Saint]

I work with pensions myself. I have a SIPP with Hargreaves Lansdown which I deal myself.

I have basically picked an OBSR Model Portfolio (google it) which best fits my attitude to investment risk, & copied the funds with my pension (why do the hard work when someone else has done the research for me) Everytime they update it which is usually quarterly I update my pension funds to match it.

 

Its obviously a long term thing but I am currently running at about 16% return for the year.

 

I am currently studying for pensions exam which I take next monday.

 

Do you find all the various funds that the OBSR model suggests are available via the HL SIPP? Thanks

[OldNick]

I have been paying in a pension for over thirty years and are rubbish. The projections that were sold at that time 10% projected earnings never materialised. I was brought up at the time believing that you got a pension and it would look after you.

[Baldbarbarian]

Do you find all the various funds that the OBSR model suggests are available via the HL SIPP? Thanks

Yes mate the fund range with the HL sipp is huge, even going as far as having aim listed shares available.

[Bucks Saint]

Yes mate the fund range with the HL sipp is huge, even going as far as having aim listed shares available.

 

Thanks.