Pension pots.. how much is too little?

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blackpuddinmonster said:
This is difficult, still having over 20 yrs still to go, but after reading DfTs' and Teetimes' posts i guess i'am not as worried as i was after reading some of the earlier posts.
We both work full time, so will both be entitled to full basic pension, thats £11,500pa give or take.
Our single largest bill is the mortgage, which will be paid of by the time i'am 60, thats £6,000 based on current payments.
Next comes food. £5,000 at the mo:, get rid of the ofspring, £3,500 ? So another £1500 to the pot.
I have no intention of quiting work completly, so 2 days a week doing what i'am doing now is £6000pa after tax.
So we are already up to £25,000. :cool:
We both have private pensions also, mine a bog standard work based contributary jobby, my wifes a decent nhs one. So when you add these to the pot i guess we're sitting pretty. We're also very lucky.
Lucky that both are in good health.
Lucky enough to both be working.
Lucky enough to own our own home.
I just hope are luck holds out for another 20yrs.:eek:
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BPM bear in mind that if you have an opted out works pension you will not also get a full state pension.

I just scraped in for a full state pension as I started work at 15 and worked P/t for 4 years after my f/t job. Even then I had to buy an extra couple of years. I had 20 years opted out so was a bit fortunate.
 
Reading this post I do think that you could live on £15K and still lead a reasonable lifestyle as I set out earlier. But I think you just need to put away as much as possible and cross your fingers that it gives you the life you want in retirement.
 
Doon frae Troon said:
BPM bear in mind that if you have an opted out works pension you will not also get a full state pension.

I just scraped in for a full state pension as I started work at 15 and worked P/t for 4 years after my f/t job. Even then I had to buy an extra couple of years. I had 20 years opted out so was a bit fortunate.
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You've got me worried again. :p
Is this where your ni contributions are paid into a private scheme instead of the state pot?
I remember being asked this, and declined the offer.
Don't no if it was the right choice financially, but i guess it means i'am ok as far as the state pension goes.
I believe you can check how many qualifying years you have paid in. Thats a job for Monday.
Thanks for the heads up. :thup:
 
The number of years contributions required to qualify for full pension, change around a few years ago.
Now if you have paid NI contributions for I think 35 years ? you qualify for full retirement state pension .
Being contracted out to other types of graduated or private pensions will change the amount of state pension you receive. And maybe put you over income limit for claiming other benefits.
 
Anyone over 45 should check their qualifying years, it is dead easy just go on the website.

It has got very messy recently my wife was one of the first batch of women to be able to claim the child caring years, that made a huge difference to her pension of an extra 14 years. Her cousin born a year earlier does not get those years.

My wife had to wait till she was nearly 62 [from 60] but now I think the qualifying age is up to 64.
 
blackpuddinmonster said:
You've got me worried again. :p
Is this where your ni contributions are paid into a private scheme instead of the state pot?
I remember being asked this, and declined the offer.
Don't no if it was the right choice financially, but i guess it means i'am ok as far as the state pension goes.
I believe you can check how many qualifying years you have paid in. Thats a job for Monday.
Thanks for the heads up. :thup:
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Opting out does not affect your basic state pension, it only affects the additional state pension that adds to it.
 
williamalex1 said:
The number of years contributions required to qualify for full pension, change around a few years ago.
Now if you have paid NI contributions for I think 35 years ? you qualify for full retirement state pension .
Being contracted out to other types of graduated or private pensions will change the amount of state pension you receive. And maybe put you over income limit for claiming other benefits.
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I see what your saying, but my understanding is if we have both got 35 yrs in we are both entitled to £110 each. Working on the principle that we won't be entitled to any other benefits, after all the other bills have been paid, power, rates, etc, we should still be left with spending money of about 10-13 grand, more if i work like i hope to.
Like Doon says, i think the knack is to not take any debts into retirement.
 
blackpuddinmonster said:
Is that what used to be called SERPS?
As Richart says i really must start taking more interest in this stuff.
I think some reading is required. :confused:
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Yes, thats right, it was the SERPS part of your NI contributions, to receive a full State pension you need to now have 30 years of class 1 NI contributions. They will also allow a number of NI qualifying years for a Woman if she was not working and looking after the children while claiming family allowance.
 
I think you can still buy additional years on your State pension to make up the 30 years.
If my memory serves it is around £800 per year. Well worth doing [unless you pop your clogs before 70]
 
MadAdey said:
Reading this post I do think that you could live on £15K and still lead a reasonable lifestyle as I set out earlier. But I think you just need to put away as much as possible and cross your fingers that it gives you the life you want in retirement.
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Full State pension is £110.15/week = just under £5.8k. Many people look at that and see it as just under £12k for husband and wife. Great when you're both alive but which ever one out lives the other suddenly finds they're back down to half that.

'Our' pension pots aren't too bad but another important aspect is making sure the right annuity is chosen so that the surviving spouse still has a decent income.
 
richart said:
I am an Independent Financial Adviser, and current basic annuity rates for a 65 year old male in good health are about 6%. This is liable for tax at your highest rate. You can take 25% tax free cash from your pot, which would normally be recommended unless you have guaranteed annuity rates written into you pension plan. A lot of old style retirement annuity contracts from the 70's and early 80's did, and these plans are like gold dust. Guaranteed rates can be 12/13%. If you have such a contract under no circumstances transfer your plan, as you will lose the guarantee

Remember if you include escalation, guaranteed payment periods, widows pension etc, the amount you will receive will drop significantly from the 6% figure I quoted. For a husband and wife both aged 65 with a 100% widows pension you may only receive about 4% per annum from your pot.

Anyone who is thinking of drawing income from their pension pot without purchasing an annuity must get professional advice. Effectively you are taking money out of your pension in the hope that the pot will grow, and or that annuity rates will not fall further. Think of the worst case scenario, your fund falls in value, rates drop further, and your pot could diminish at a very quick rate. Of course the opposite could happen but can you take the risk ?

These are just general points, and as I mentioned always take professional advice, preferably from a pension specialist.
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An excellent "out of bounds" topic, and thanks to Richart for his input. My wife and I intend to retire in 4 years at 56 and 57 repectively. My wife has a teachers pension but to supplement years missed she has a stakeholder which she has paid the maximum into now for many years. I find it interesting that Richart reccomends taking a 25% tax free lump sum, is that just because you pay no tax on that ammount or are there other factors?
I also find it quite interesting the suggestion of saving for a pension in an ISA, I presume this to be a cash ISA, taking that into account it isn't going to make much of a pension pot after 30/40 years considering at present you are looking at best 2% interest on a maximum anual ammount of £5760. I feel nowadays if you want to end up with a decent pot to retire on some risk (i.e investing in equity) is essential up until the latter years with annuity rates being so low.
Richart do you see any potential increase on the horizon in annuity rates?
 
Hobbit said:
Full State pension is £110.15/week = just under £5.8k. Many people look at that and see it as just under £12k for husband and wife. Great when you're both alive but which ever one out lives the other suddenly finds they're back down to half that.

'Our' pension pots aren't too bad but another important aspect is making sure the right annuity is chosen so that the surviving spouse still has a decent income.
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Good point Hobbit.
Being simple folk are plans are for our private pots to be good enough to cover our living expenses, leaving the state pot as spending money.
With 20yrs still to go, is there any way to find out if we are on track?
 
SocketRocket said:
Yes, thats right, it was the SERPS part of your NI contributions, to receive a full State pension you need to now have 30 years of class 1 NI contributions. They will also allow a number of NI qualifying years for a Woman if she was not working and looking after the children while claiming family allowance.
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After doing a quick bit of reading this morning, its now going to be 35 yrs, and i can't retire untill i'am at least 67.:(
The good news is that from 2017 the whole system is going to be made simpler, something called The Single-tier pension. The good, good news is that with 35 yrs in we will both get £144 in todays money. :cool:
 
blackpuddinmonster said:
After doing a quick bit of reading this morning, its now going to be 35 yrs, and i can't retire untill i'am at least 67.:(
The good news is that from 2017 the whole system is going to be made simpler, something called The Single-tier pension. The good, good news is that with 35 yrs in we will both get £144 in todays money. :cool:
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I had to accrue a minimum 44 years NI for my state pension, it was reduced a few years ago to 30. The future increase in the pension will be good news for new pensioners but some will lose out as they are removing the additional state pension payments. Existing pensioners will not get this new level either thus creating a two tier state pension. We will have a situation where two people reaching pension age a month apart and having paid the same level of NI contributions, one will get around £40 a week more than the other.
 
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SocketRocket said:
I had to accrue a minimum 44 years NI for my state pension, it was reduced a few years ago to 30. The future increase in the pension will be good news for new pensioners but some will lose out as they are removing the additional state pension payments. Existing pensioners will not get this new level either thus creating a two tier state pension. We will have a situation where two people reaching pension age a month apart and having paid the same level of NI contributions, one will get around £40 a week more than the other.
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That is bad news Socket. So your pension does not rise in 2017? That stinks a bit to be honest. :angry:
As you say, two sides to each story, nothing changes. Plus seeing as i can't retire until 2033 everything is bound to have changed again by then.
 
Doon frae Troon said:
Single tier pension....is that the one where a guy who has never worked in his life will get the same pension as someone who has worked all their life?
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No, its not like that. I think you still have to pay 30 years full NI contributions for a full pension which will be around £140 a week baseed on todays values. If you pay in less NI then you will recieve a reduced pension just like at present. If you are already recieving a state pension before the date it is implemented then you will not get the enhanced amount.
 
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