Well people come across differently based on things such as autism. Admittedly not easy to pick up on a forum but you need to be prepared to sometimes give people the benefit of the doubt and not just label some as a horrible arsehole who should not be allowed on a forum.
Just think about how that may feel to some people...
"It doesn’t work though, because if you start at 60 you’ll not have much in a pension pot by the age of 67 even if you’re putting 30% of your salary in. It’s a good thing to think about based on zero info about the person, their situation, their salary growth etc"
If you've not got a pension by 60 you're bollox'd IMO anyway really, and will be relying pretty much 100% on the State (or inheritances and/or selling assets) to get through retirement.
The "half your age as a percentage" is good advice on the whole for folk who want an equivalent lifestyle in retirement to the one they had while working.
Just think about how that may feel to some people…
I felt I covered that in an earlier post when I said 'Apologises if I am misreading'.
It's worth pointing out that you should maximise your state pension if you can. You now need 35 years contributions by the time you retire (just hit mine at 56 and retire at 67). Current state pension is £10,600 per annum and subject to the triple lock. For valuation purposes that's a fund of 20x annual or £212,000. Annuities are higher than that, so you would need a fund probably 30x or about £318,000. Now why you should max out your state pension...
Each year contributes 1/35 or £302.85, and you can buy a year for about £850. Assuming you live three years beyond retirement age, it's neutral. You won't get the tax allowance on contributions at your marginal rate, but this is a very good deal. And the closing dates have been extended.
Half your age is a good starting point for long-term contributions. I have tried to maintain that at considerable cost (new cars, holidays, etc...). But with nothing at 60, I'd be looking at state pension maximisation (you may already), then as much as you can afford for maximal tax relief for a few years. You'll likely be able to get back 25% of it tax free completely, and the rest will be under the tax threshold. That and a part-time barista job in a small independent cafe to meet people 😉
IANAFA but " I have a considerably larger pension pot that yew" comments aren't helpful.
growing really old looks a bit shit
until you consider the alternative.
My younger brother died at 36 from bowel cancer - i'm good with growing old, even if it is a bit shit.
I was genuinely surprised to find out that I'll hit mine at 51 - the minimum age possible. It never occurred to me that I'd been paying enough NI to qualify for all those years, but thinking back, even as a student I was never unemployed, I've always had a full time job from 16 and even when at uni, I was part time for 6 months and full time for 5 months.
Definitely worth checking what TiRed said above and what others have said about tracing pension pots. I believe it was 2008 when the workplace pension law came into effect?
49 here and paying the minimum workplace pension requirements. I won’t be able to increase anything untill kids are through uni which will make me c.53/4 when I start piling money into pension and ISA. I’ll also be starting to fund their pensions on a small scale, because young people don’t think about that stuff and time is a very good thing for pension growth.
In a situation like this, I'd be looking very carefully at the time/tax/borrowing scenario and possibly look to start early. You biggest lever in pensions is the ability to salary sacrifice, but you can only do that to a point. So slamming huge sums in to it in 4 years might cost you more than paying a less later and more now, even if you have to zero percent card that debt for a few years. Also - don't forget the compound rates, at these rates, putting 20% away every month at a 40% rate will only cost you 12% and you'll get up to 6% compound interest on everything you can put away in that 4 year period - finance the rest on a zero percent card for the 4 years.
At the end of that period, continue paying the 20% and use the extra you would've slammed away to clear the debt.
Flip it around and say you're now putting in 40%, most of that would only be covered at the 20% rate (for most wage earners) an so your tax saving might be as little as 25% rather than the 40% you would've achieved. Say you were putting £1000 a month - that costs you £600 a month in the first scenario, but at the end of 8 years it's worth ~£120k and you've paid £56k. In the second scenario you have ~£105k, but it cost you £72k. You've essentially made £30k! in 8 years. All you have to do is juggle cards and payments for the 8 years and likely pay some balance transfer fees at around 3%. Make the finance sector work for you!
choppersquad - two recent posts strike me as being (potentially) very relevant to you:
- auto enrolment was introduced in 2012 making it compulsory for employers without a company pension scheme to enrol all employees. Your employer had/has a company scheme which you were in but then stopped making contributions; in that circumstance would your employer have been required to auto enrol you into NEST or similar?
It's worth getting absolute clarity around that.
- TiRed's post regarding ensuring you have no gaps in your NI contribution history.
I think it was konagirl who suggested a spreadsheet to record/calculate disposable income which would then enable you to make an informed decision about how much you can afford to save/safely invest - if that's your objective; would definitely endorse that advice.
Is your 'frozen' pension defined contribution or benefit?
Can your employer provide a forecast (best guess, really) of it's value when you reach 60 or 65?
I would suggest you get a transfer value from your employer as this will give you a basis for deciding what to do next - leave where it is or investigate putting it into a SIPP.
JFC, ive just checked my NI contributions and ive already been working (enough for full years) for 29 years.
What happens when you get the required qualifying years, do I get a carriage clock?
Oh no hang on, ive seen one number of needing 30 years and another saying 35 years. Looks like 35 years as thats for the full state pension and not some sort of proportion if less than that is contributed.
That "number of years thing" is a bit of a red herring as it can be affected by any private pension scheme you're been part of during your working life.
without thinking back about the start of the post
Everything else aside, this single statement qualifies you to be in this forum.
How so Jolsa?
Daffy - been thinking about something like that for exactly the reasons stated.
I went and had a look at my NI record (state pension forecast) as i thought it was 30 years, not 35 years.
As of today, with 29 qualifying years, I am forecast to get £199.23 per week (maximum is £203.85 per week)
So another 6 years contributions will net me £4 odd per week
However the landscape could change before I get there.......
But you don't stop paying NI when you reach 35 years though - you continue to contribute until you stop working (you can work past your retirement age and your pension actually goes up a bit).
How so Jolsa?
Tongue in cheek comment regarding the amount of thread drift
thought I'd posted this, but the forum must have done its thing again....
State pension - I believe when you are in higher education, those years count don't they? Mine are down as no contribution. Was there something I was supposed to know about as an 18 year old that would have meant they had counted, or should it have happened automatically through the fact I went to a uk uni? Any way of getting those years reinstated?
scotroutes - your recent post is not my understanding; can you explain?
I believe Scotroutes is talking about being 'Contracted Out'
https://www.gov.uk/contracted-out/new-state-pension
Check if you were contracted out
If you were employed before April 2016, you were probably contracted out at some point. Almost all public sector workers were contracted out - for example, NHS workers, council workers and teachers.
If you’re under State Pension age
Check your State Pension forecast. If you were contracted out, your forecast will include a ‘Contracted-Out Pension Equivalent’ estimate.
@DT78
Student National Insurance contributions (NICs)
You don't start paying National Insurance until you're over 16-years-old. Students who are older than this are not exempt; if they earn enough, they pay like any other worker.
If students don't do paid work, they're not credited with NICs for the years they are studying.
This creates a gap in their contributions record, although most will still work for enough years after qualifying to merit a full state pension.
Which would explain why only half my Uni years contribute - i took summer jobs during those years.
– auto enrolment was introduced in 2012 making it compulsory for employers without a company pension scheme to enrol all employees. Your employer had/has a company scheme which you were in but then stopped making contributions; in that circumstance would your employer have been required to auto enrol you into NEST or similar?
My understanding is that employers were required to provide pensions, so long as the employee agreed to contribute, and employees could still "opt out". It is easy to hear of those who did opt out and roll our eyes as that is clearly not the best long-term financial decision, but some people were (and definitely now are) so cash strapped that those few % of earnings were worth keeping to themselves to put food on the table rather than have their employer chuck more on top and then the government add more again. I think some also opted out because they didn't trust their employer / pension provider / government etc. That may have been well-founded but in most cases was probably misplaced - but I've had conversations with 20-somethings about pensions, life insurance etc as part of benefits discussions and its difficult to get them to perceived the value in these things.
Tongue in cheek comment regarding the amount of thread drift
Went straight over my head. 😁
What happens when you get the required qualifying years, do I get a carriage clock?
You get the ability to retire at full state pension levels at the current 67 years of age and in the mean time, you pay for other people's retirement.
