Your Pension

[Howyoudoin]

Evening Snuggers,

I didn't really want to talk about work but sometimes events take over.

Today, I was told, i'm not going to get a pay rise over inflation because my pension is too high.

By 'high' read 16% non-contributory of my salary now that I've been working for the company for over 15 years.

Bearing in mind my years of service, what are other working Snuggers getting in their pension?


I remember when I started work in the late 80s, everyone was on a Final Salary Scheme. The maximum pension you could get was 40/60, so 66.6%.

Therefore, if your salary was £50,000 when you retired, and you had done 40 years service, you would get a pension of £33,333 a year for the rest of your life. I can only dream of that now.


Thanks for any input and have a good weekend all,

HYD

[nimnarb]

There's also a Pension Board and a Retirement board here HYD.....might get some good replies there?

[Howyoudoin]

There's also a Pension Board and a Retirement board here HYD.....might get some good replies there?

I used to like the old Snug, when it first started back at TMF, cos we could talk about pretty much anything, much like you'd do in any pub in the Country.

Then, people started saying, "there's a dedicated board for that, why don't you go over there?'

And other people used to say, 'what's the point of a pub/snug if everyone is going to ask us to post elsewhere?'

The point of the post in my OP above was to get the opinion of people that I know on here. But never mind. Some things never change.


HYD

[CryptoPlankton]

There's also a Pension Board and a Retirement board here HYD.....might get some good replies there?

I used to like the old Snug, when it first started back at TMF, cos we could talk about pretty much anything, much like you'd do in any pub in the Country.

Then, people started saying, "there's a dedicated board for that, why don't you go over there?'

And other people used to say, 'what's the point of a pub/snug if everyone is going to ask us to post elsewhere?'

The point of the post in my OP above was to get the opinion of people that I know on here. But never mind. Some things never change.


HYD

I didn't see any suggestion that you shouldn't have posted here - just some well-intentioned information offering extra options (hence "also") for you to explore the subject. Now it is known that you only want feedback from people you know on this board, I'm sure you will get your wish!

Welcome back, btw

[nimnarb]

HYD................You OK? Or just a hard day at the office? You obviously know that I can't help you being overseas, hence suggesting another board(since being new, you may not have noticed that there are boards that specialize in your topic possibly)..............perhaps though, those that you know here from the past may have some ideas......................not sure what else to say

[dionaeamuscipula]

Evening Snuggers,


Today, I was told, i'm not going to get a pay rise over inflation because my pension is too high.

By 'high' read 16% non-contributory of my salary now that I've been working for the company for over 15 years.

Bearing in mind my years of service, what are other working Snuggers getting in their pension?


HYD

Wow, that's the highest I've seen outside listed board levels. I get 5% + 5%, as does everyone else here (including the exec board). I use to get 12 +3 back when I was a small boy. NHS is 9+6 (or at least used to be, I'm going back a long way there, and I was never an NHS employee myself). My pension pot is way, way above the average, but I will get less than a quarter of my current gross salary from it.

DM

[mark88man]

Hi HYD

What a typical TLF thread - an interesting question, a debate about procedure/location, some raised hackles and then the start of some good chat

Not sure (but presuming) your non salary contributions are to a DB scheme - therefore there isn't a real connection between what you pay and what you accrue other than 16% sounds a more realistic figure than many use to help your scheme build its assets to cover you as a liability

My DC fund (after DB was closed despite (or because of) a 22% contribution requirement) consists of two bits
* the contracted out SERPS bit which I have used for a roller coaster of risky investments but is now showing an IRR of 8% and some hope for the future
* the ongoing monthly bit is done on a 4% - 8% split (ie they match and then match again. extra 6% contributions from me up to to 10% would only get another 2%) so although thats still free money I havent done that.

Cheers

[Urbandreamer]

I remember when I started work in the late 80s, everyone was on a Final Salary Scheme. The maximum pension you could get was 40/60, so 66.6%.

Therefore, if your salary was £50,000 when you retired, and you had done 40 years service, you would get a pension of £33,333 a year for the rest of your life. I can only dream of that now.

Are you sure that you can only dream of that now?

I don't know your details, but you could work out how much you would have to contribute to achieve that level of income. I did calculate that the pot would need to be £833,333 if you assumed no other pension and that 4%pa would be a safe drawdown rate.

You do know that you may not be limited to those non-contributary pension contributions don't you. I contribute into a SIPP in addition to the salary sacrifice pension organised through work.

I contribute about half of my income into pension funds. I'm planning on retiring early, but it's actually more a case that such contributions make more sense (in my situation) than "saving" the money anywhere else. I also enjoy managing my portfolio.

Ps I keep a spreadsheet predicting things like presumed capital for lifetime allowance and intend to avoid the tax penalty for saveing too much.

[tjh290633]

You may like to recall that, in the 1990s quite a lot of companies had to take pension contribution holidays, because they were overfunded. I worked for Babcock and a precursor from 1968 to 1990, and I don't recall the company contribution ever being in excess of 5%. I might add that I am enjoying my pension, which when I left was 34% of my leaving salary and when I retired in 1998 it was 47% of my leaving salary for my 22 years service. The scheme pension increases by 3% per year fixed, while the GMP does what the government says. Currently the total is 73% of my leaving salary.

I had a DC pension with my final employer and an FSAVC alongside it, which I used to avoid the higher tax band. As a result I retired on about 2/3rds of my final salary at retirement. Currently pensions are 112% of my retiring salary.

TJH

[Howyoudoin]

HYD................You OK? Or just a hard day at the office? You obviously know that I can't help you being overseas, hence suggesting another board(since being new, you may not have noticed that there are boards that specialize in your topic possibly)..............perhaps though, those that you know here from the past may have some ideas......................not sure what else to say

My apologies for being a complete [expletive deleted] last night, Branmin.

All the best,


HYD

[Slarti]

Being self employed I effectively don't have a pension, other than a couple of frozen bits from when I was employed, over 30 years ago.

Mine is effectively my self select ISA which has grown quite nicely, despite a few disasters, like Marconi going pop while I was not looking.

I believe that, together with the state pension I should be bringing in about the same, after tax, as I have been for the last few years.

But that doesn't help you, does it?


Cheers
Slarti

[PinkDalek]

My apologies for being a complete Pink marshmallows last night, Branmin.

Congratulations on invoking The Lemon Fool profanity filter, about which much was written in the early days.

[UncleEbenezer]

I believe that, together with the state pension I should be bringing in about the same, after tax, as I have been for the last few years.
Slarti

Is that good or bad?

I see the most important role of my pension provision as being to give me security until I hit state pension age. Happily it's now more than ample for that.

Provided I own an acceptable house or flat by then, I have no fear of living on the state pension alone. I saw how much better-off my own parents were on the pension than when working: getting rid of kids and mortgage made a much bigger difference than the drop in headline income from retiring. And the basic state pension has only grown since then, though I'm not relying on that, as it's sure to hit a crunch before my time.

[Slarti]

I believe that, together with the state pension I should be bringing in about the same, after tax, as I have been for the last few years.
Slarti

Is that good or bad?

I see the most important role of my pension provision as being to give me security until I hit state pension age. Happily it's now more than ample for that.

Provided I own an acceptable house or flat by then, I have no fear of living on the state pension alone. I saw how much better-off my own parents were on the pension than when working: getting rid of kids and mortgage made a much bigger difference than the drop in headline income from retiring. And the basic state pension has only grown since then, though I'm not relying on that, as it's sure to hit a crunch before my time.

Not bad, even though my income has reduced in recent years due to me working less.

Mrs S' state pension would just about cover the living expenses and when mine kicks in, in September, we will more than double that source of income.

The ISAS are quietly building up and even without dividends & interest would give us 20 years at current rates of expenditure.
The house is mortgage free and too big for us, so downsizing will free up cash while reducing all premises related bills.

So overall, unless the whole economy tanks, we should be as well off as we want to be. Even if we do have to replace things like cars in a few years.

If I'd paid into normal pension pots I don't think that I'd be anywhere near as well off when I retire, given the returns on annuities. I know the situation has changed, in that you no longer have to have one, but back when I had to make my decisions, you did and the returns on them were rubbish.

Cheers
Slarti

[Urbandreamer]

If I'd paid into normal pension pots I don't think that I'd be anywhere near as well off when I retire, given the returns on annuities. I know the situation has changed, in that you no longer have to have one, but back when I had to make my decisions, you did and the returns on them were rubbish.

Cheers
Slarti

That, amongst other things is why I'm now paying as much as I am into pensions. Like you I have lived through different pension regemes. It's all well and good for the OP to lament the death of the final salary scheme that paid 40/60ths or 60/84ths on retirment, but what of those who intended to retire early? I knew a man denied his pension at "retirment" because the company wanted him to continue working through his wifes terminal illness. He was actually old enough to take early retirment, if the company aproved it. At the time I wished to retire earlier than the age that they might even consider.

Likewise there was a time (as you say) when pension contributions HAD to be spent on an annuity, which mostly invested in government bonds. Anyone question the linkage there? Like you I directed savings for old age to an ISA, paying the minimum into the company scheme to keep it going.

Today, I contribute significant sums to a pension. Not just to fund my old age (which the ISA was/is intended to do) but to avoid IHT and pass things on. However I now need to be careful that I am not taxed because I chose to invest and was wise enough to pick good investments (the life time allowance).

How will pensions change in the future? I confess that I'm just glad that there has actually been over 12 months that the goal posts didn't move.

There is talk about introducing a lifetime allowance on ISA's. Right or wrong, we have no choice to endure the current tax and pension legislation, and keep track of how it changes. Sure It's likely a lifetime allowance won't effect you or me as regards ISA's, but I wouldn't bet on it not effecting those who use a lifetime ISA to fund their old age.