workplace pention, wtf?

[Wonko The Sane]

Over a year ago the workplace pension roll out caught up with the company I work for and I have a pension (yay) into which currently £10 a month goes.

here ends my knowledge on pensions.

who do I need to be talking to (the chaps who came to tell us about the roll out said they can't give financial advice) to understand it better?

What do I need to be doing to try and ensure I've got a reasonable pension for retirement?
I'm 33 with a student loan that's increasing as the interest is higher than my re-payments if that makes any difference?
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[Kai.Wilson]

I'm 23 and pay £15ish a week into my pension

Way I look at it I'd like to retire at 67 ish and be comftable

Way the shit is going there won't be a state one by time I reach the age so might as well plan and save

Other motivation seeing that the other halfs grandad is comftable now after paying into his pensions (army and 2 private)

[Itchy]

[Wonko The Sane]

[Itchy]

[Rogerborg]

[Itchy]

[Nobby the Bastard]

Your employer could also be putting in some contributions for you, typically 12%
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[M.C]

Simple solution; don't live that long

[Derivative]

Step 1: ignore the scary jargon word 'pension' and think about a big piggy bank.

Let's imagine that you currently spend 10K a year and you expect to live in roughly the same way when you're old. (I'll probably spend less because I'll sit inside all day as a broken husk).

If you want to retire at 50, and die at age 80, you'll need 30 years of that. That's 300K.

You can achieve that by putting 10K in a savings account each year for 30 years.

Job done. Oh, you're still here. OK then.

Investments ideally allow your savings to hold their value against inflation. So your 300K may end up being 1M. But that's in future money which buys less and will be worth about '300K today'. If you're lucky and/or good, you manage to make a profit and live a bit better. Matching inflation (true inflation, ignore RPI/CPI/bollocks) is not a bad target to aim for.

Pensions have two main advantages.

Tax benefits (pay in today's pretax, get out untaxed if you're below thresholds in old age). This one really depends on how you expect taxation policy to be in 30-50 years' time. I personally think that the 20-40% on offer is a bad gamble unless you have nothing else to spend it on (car, home, etc paid off).

Employer matching (pay in 1 quid, employer pays in 1 quid). This is pretty good if you have it and is basically free money.

Possible gotchas include crap investments in employer funds.

Annuities have always seemed like complete nonsense to me but that's because I am almost entirely certain that I won't have an above average lifespan and if I do I'll be useless towards the end anyway. Think about them as a way of turning a lump sum into annual payments that stop on death. That's it.

TL;DR version - focus on actually saving actual money first (by securing a high income and reducing expenses), investing as a means of battling inflation, and pensions as a relatively small optimization on that.

10 quid a month is a giggle. I spent that today in the pub and you probably do too. Realistically you want to save about as much as you spend. Yes, most of the country will be poor. No, you don't need to be like them.

[Derivative]

Oh, and:

[Rogerborg]

[Wonko The Sane]

The amount put in that I quoted earlier is based on the deduction on my payslip.

So, I need to find a trustworthy financial advisor, I presume they charge for their time since I can't see how they'd get a kick-back in the same way a mortgage advisor does.
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[Itchy]

[ScaredyCat]

You should just spend all your money now while you can. The state will look after you if you have nothing but will tell you to do one if you have any sort of pension pot of your own.

Hookers and Coke...
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[Derivative]

An accountant is virtually useless if you have a small income.

An IFA is virtually useless if you have little wealth.

It's a bit like hiring a security guard with nothing to protect. Waste of money.

Generally you hire specialists to do work that would cost you more to do yourself.

Like getting decorators in because it'd cost you 2 weeks off work to do it to the required standard.

[Derivative]

[Robby]

Get some independent advice. BCF tends to give some really awful pension advice.

That said, £10/month is fuck all. Multiply it by 10.

As for the advice saying "spend it on your mortgage now, do pension later" - the problem is that if you do this, you don't start on your pension until you're in your mid 40s. That's too late.

[Derivative]

[pompousporcup...]

i know nothing about pensions, other than i have one and am lucky enough that the company i work for doubles what i put in

My game plan is to have my mortgage paid off asap AS WELL AS putting 100-150 PM into the pension pot. I have a feeling that down sizing from a 4 bed house to a bungalow or similar at retirement is going to do more for me than putting money into a pension now

get on the property ladder asap and get paying it off. the more you pay off over time, the lower your monthly repayments are which means more to spend on hook.. i mean the more you can save for when you retire

[Rogerborg]

All being well, gambling on the stock market is probably a better long term investment than paying down a mortgage at current rates.

However, if you or the missus and/or kids and/or parents come down with something chronic that requires full time care and removes your ability to work, you'll wish you'd gone for owner-outright ASAP.
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[stinkwheel]

Thus far, the government has kept taxation of pensions to after retirement. I personally feel this is a situation that wont go on for much longer.
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[Rogerborg]

It can't continue, because economics is a fiction. Reality is demographics.

For every X inactive geezers, we need Y people from the pool of Z available workers to support them. As X increases and Z decreases, there needs to be increasing incentive for Y to wipe X's backside.

Taxation and government spending at its core is coercion: the State steals from us in order to make us dependent on clawing some of it back by doing the jobs that the State wants doing.

For society to keep functioning, we can't all retire. Whatever the mechanism - taxation on contributions, means tested State pension, plundering private pots - the goal is to keep more and more of us working for longer and longer.
____________________
Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[angryjonny]

The figure I was told once, by a pension adviser, was that to get a pension that's any use at all at retirement you need to pay in, as a percentage of your salary, half your age when you started your pension.

So if you started paying in at 30, 15% of your salary should be going in.

To be honest that's probably only true up to a point. If you start paying in at 60, then 30% of your salary for 5 years does not purchase much of an annuity. The older you are when you start, the more you have to pile in.

You have to assume that the money in the pot won't get frittered away by rogue traders. You also have to assume it won't get raided to pay other people's pensions. The illusion is that there's a big safe with your money in it. The reality is that it's a big ponzi scheme.

My company matches contributions up to 10%, so if I pay in 10% then they pay in 10% too. So to have 20% going into the pot costs me 6% of my salary. I am, therefore, doing this.

However, I am not relying on it as my sole source of retirement income. Spread it all around and you may have some left when you're 76 (or whatever the retirement age is by the time we get there).

[BrownTrousers]

Don't worry about trying to calculate what it will be worth when you retire. As already said, trying to make sure a pension pot is going to provide a reasonable pension for retirement is a game of conjecture and will vary wildly based on;
-investment returns / inflation
-taxation legislation changes
-demographics (retirement age)

However, your employer probably matches any contribution you make, up to a certain point. This is free money, so you should pay in whatever is required in order to maximise the employer's matching.

Don't contribute any more than that. If you still have disposable income, clear your loans or invest it somewhere else (motorbikes, obviously).
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