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blondebier

Pensions

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Calling all financial gurus,

There's been a lot of news in the press recently about pensions and how the majority of people are not saving enough for their retirement.

I'm 25 and the company I work for have setup a Stakeholder pension plan for me with Clerical medical. They contribute 10% of my salary and I add a further 5% on top of that. Are there any financial calculators that would enable me to work out a future value projection? Obviously this would vary depending on how well it did, but it would be nice to play around with some figures.

How much would you recommend putting into a pension?

My dilemma is that the more I put into my pension the less I can save for a house deposit.

Would I be better saving more towards a deposit and add to my pension later? I am currently able to save about £750 a month and put £100 extra into my pension. (I think £350pm goes into it with the work contribution)

I'd appreciate any advice... :unsure:

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Calling all financial gurus,

There's been a lot of news in the press recently about pensions and how the majority of people are not saving enough for their retirement.

I'm 25 and the company I work for have setup a Stakeholder pension plan for me with Clerical medical. They contribute 10% of my salary and I add a further 5% on top of that. Are there any financial calculators that would enable me to work out a future value projection? Obviously this would vary depending on how well it did, but it would be nice to play around with some figures.

How much would you recommend putting into a pension?

My dilemma is that the more I put into my pension the less I can save for a house deposit.

Would I be better saving more towards a deposit and add to my pension later? I am currently able to save about £750 a month and put £100 extra into my pension. (I think £350pm goes into it with the work contribution)

I'd appreciate any advice... :unsure:

you work out what your sav ings will produce in x yrs time. You multiply this by say 4% and there's the income you'll get NB tax. Then you discount for say 3% RPI and then you'll know what income you'll get in today's terms

have fun...

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you work out what your sav ings will produce in x yrs time. You multiply this by say 4% and there's the income you'll get NB tax. Then you discount for say 3% RPI and then you'll know what income you'll get in today's terms

have fun...

Yikes!

I did find this helpful calculator.

The amount you need to invest is quite staggering.

The illustration I received when it was setup included various projections. 5%, 7% and 9% but I can't see that they really mean anything until the time comes for you to cash it in.

Here's another question: If the situation arose where inflation were to start running off at say 10%, would my pension keep up? i.e. Would the rate of growth increase as well?

:unsure: It's all good fun...

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Yikes!

The amount you need to invest is quite staggering.

welcome to the real world

Here's another question: If the situation arose where inflation were to start running off at say 10%, would my pension keep up? i.e. Would the rate of growth increase as well?

depends entirely on what you invest in - the wrapper (pension, ISA, life bond, OEIC) is irellevant - just a tax help.

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welcome to the real world

Exactly. After house prices and possible recession, pensions really are the elephant in the front room.

I try and tell colleagues just how much they need to save if they want a comfortable retirement and they are all in denial about it.

It's the usual story - deep down they think their property will cover them :(

I've mentioned this subject before, but amongst my colleagues there are people in their thirties with inadequate pension provision thinking they will be able to retire at 55.

This really is a big story and nobody wants to face up to it.

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The worrying thing is that not many people seem that bothered about it.

Most of my peers say that they'll sort it out later. I know one guy that thinks he'll be ok without a pension and he'll buy a house and let it out... :o

If you read this thread and you havn't got any plans for your retirement I can only recommend doing a little research. Don't put it off. ;)

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The worrying thing is that not many people seem that bothered about it.

Most of my peers say that they'll sort it out later. I know one guy that thinks he'll be ok without a pension and he'll buy a house and let it out... :o

If you read this thread and you havn't got any plans for your retirement I can only recommend doing a little research. Don't put it off. ;)

Your pension provider should give you an estimate of final pension income in your yearly statement. If you give them permission they will also be able to factor in state pension and serps.

I've been paying into my pension since I was 18 (now 28) and over the few years I've seen the value of my pension drop by 20% a year at worst and gain by 30% at best. Estimating average return is quite difficult, but over the last 10 years I reckon it's been about 7-8% growth on top of contributions.

Edited by Free Thinker

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15% of salary is good through your age (starting late) works against you. I'd suggest keeping some savings in an ISA. If the recession hits then a year or two in move the ISA money into your pension. This should make up for starting late.

Buying a house can be tackled separately.

You should have a fully paid up house when you retire but the timing of buying it isup to you so wait till prices are more reasonable to start.

I'm no financial advisor but it's what i'm doing with the main difference being that 20% of my house sale money is ear marked for boosting my pension. Through i expect i'll keep it in a Japanese ISA tracker rather than a pension fund throuhg if tax rules change i'd drag it out and into a pension.

The big big problem is that nobody know what changes in the pension system will occur in the next 30 years, which makes it very hard to plan.

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I would reckon on needing savings 25 times your required retirement income. And pensions are a nice wrapper to do it in. As are ISA's

Reckon on living to 90, working to 65. That means in the next 40 years, you need to save enough to cover 25 years expenses! Obviously investment growth means that you don't need to save >50% of your salary, but I would be looking at 30-40% range (including capital repayments when you have a mortgage)

Or have lots of kids, and hope one will take pity on you

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Reckon on living to 90, working to 65.

I disagree. If you're 25 now I'd reckon on one of two things: dying at 40 in a world war or disease pandemic or from a heart attack due to living an unhealthy lifestyle, or living to at least 120. If we don't have 120 year lifespans within fifty years, it'll be because we're either dead or living in caves after a global collapse.

If pensions are the elephant in the room, then life extension is the Godzilla in the corner. You sure ain't going to be retiring at 55 and living for another 65 years on a pension unless you're very rich.

Edited by MarkG

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I looked at starting to pay into my company stakeholder pension last year, and I was shocked at how much you needed to put it to get a resonable return - and as a result havent started a pension yet!

Having to pay off student loans, save for a house, pay for running costs of a car etc and put into a pension is just too much! Have to cut corners somewhere, so at the moment its the pension!

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15% of salary is good through your age (starting late) works against you. I'd suggest keeping some savings in an ISA. If the recession hits then a year or two in move the ISA money into your pension. This should make up for starting late.

Buying a house can be tackled separately.

You should have a fully paid up house when you retire but the timing of buying it isup to you so wait till prices are more reasonable to start.

I'm no financial advisor but it's what i'm doing with the main difference being that 20% of my house sale money is ear marked for boosting my pension. Through i expect i'll keep it in a Japanese ISA tracker rather than a pension fund throuhg if tax rules change i'd drag it out and into a pension.

The big big problem is that nobody know what changes in the pension system will occur in the next 30 years, which makes it very hard to plan.

ISA into Pension? This is illogical.

Assuming the tax rules are the same when you retire as they are now :ph34r:

Put simply (and i'm not going into the pros and cons of either wrapper as it depends on your circumstances - Though I contribute to both)

Pension - no tax hit now (as contributions are paid before deductions), but there is income tax on future income (partial tax free lump sum available, but compulsory purchased annuity income will be taxed)

ISA - Tax hit now (as you pay into it after deductions), but no income tax hit on future income (Can take all as lump sum if you wish, but assuming you place it into a fund that pays out income as distributions)

Moving your ISA pot into a pension (I assume you mean paying AVCs or into a private pension) will LOSE you future benefits that the ISA provides.

The good thing you are doing is contributing to your future :)

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Guest tenant super

Blondebier

It's not sufficient just to put money into a pension you must actively review your investment fund too, for example, you need to keep your wits iro the relationship between the sterling exchange rate and overseas stock prices if in an international fund.

If your employer contribution in part matches your contribution then you are definitely doing the right thing, you are stowing 15% of your salary away for the future but it's not costing you that much really.

Interestingly, considering the debates we have had on the site iro SIPPS... Well eventually your pension fund will be large enough for you to transfer to a SIPP and buy a house with it ! And your employer would have paid for two thirds of it...

IRO SIPPS, I was sort of joking, but us FTB's need to think about these things don't we. Needless to say, the sooner house prices collapse the sooner your fund will reach the target amount, and it's not likely to help out with your first house admittedly! Nor your second :( , maybe not your third either thinking about it.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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