Advice for someone with no pension.

This thread has prompted me to take a look at my old employer pension I hadn’t looked at for ages – paid into for 8 years, worth £52k, projected pa pension at 65 (20 years from now) is……..drum roll….. £1250, so £100 a month.

I don’t think I’ll be jetting off on many cruises 🙁

“All being well that pot value is going to be knocking on the door of £100k by the time you reach state retirement age.”

And worth about £2-3k pa as a pension.

An extra £2-3k pa could be the difference between a nice holiday or not.

Personally I’d rather have the £100k than not, especially as it would have cost me less than £40k to achieve it. Add that to a couple of state pensions and whatever other savings you can put together over the next 20 years. As Tesco say, every little helps.

My retirement plans are;

1. The absolute caning my body and brain took in my late teens early 20’s kills me off early.

2. I’m going to attempt a bank job robbery and either get caught and fed 3times a day with no heating bills to pay, or if I get lucky blow it all on C&H and die of heart attack under Cindy Bigtits.

My plans are;

1. The absolute caning my body and brain took in my late teens early 20’s kills me off early.

2. I’m going to attempt a bank job robbery and either get caught and fed 3times a day with no heating bills to pay, or if I get lucky blow it all on C&H and die of heart attack under Cindy Bigtits.

Either way, it looks like your going to be getting a lot of sex in later life 😀

Paying in to a pension does lock the money away but alternative savings have to go a very long way to beat the tax and ni savings + the 20%.

‘Which’ has a useful guide on how much of a pot you’ll want for 3 levels of retirement income. If you’re not planning an extravagant lifestyle it’s surprisingly affordable imv but you’ll be wanting to smash a lot away now op. I started late as well fwiw.

“As a rule of thumb I was told you should be looking to save your age as a % of your salary. “

HALF your age.

“An extra £2-3k pa could be the difference between a nice holiday or not.”

If this is your only pension other than the State Pension, it’ll probably block you from receiving far, far more in State Benefits and the like.

The thing is, most people seem to say that you need about a million quid in your pension pot to comfortably retire.

I don’t know that “most” people say that, but certainly its a number bandied around by people who have got used to a very comfortable standard of living who want to retire with a similarly comfortable standard of living especially if you want to do it “early”.  But clearly the number must be different depending on your aspirations, how much if anything you hope to leave as a legacy for your successors, the age you want to retire, and perhaps even how long you expect to live.  If you and a spouse want to live in your 4 bedroom family home, with your country cottage retreat (or even static caravan), have 2 foreign holidays a year, each have your own car and splash cash on new bikes and woodburners like an IT consutant on STW then you need a very different size pot from if you are living in a small 2 bed terrace with one modest car and your holidays invove a touring bike and a tent.   Be careful about being sucked into other people’s aspirations!

Look on the bright side, you might die at 65 and then won’t have spent your life putting money into something you will never use.

At worst, you’re leaving something to help your next of kin financially.

I don’t know that “most” people say that, but certainly its a number bandied around by people who have got used to a very comfortable standard of living

It might just be ‘most’ people on STW, who are not really financially representative of the wider world!

Also the people who are happy talking pensions can tend to be those who are well on top of things. If your approach to personal finance is to quickly stuff all those letters unopened into a drawer, before the grim pit-of-stomach sense of nausea gets too much (quick wave to my dear wife here) you’re probably not going to be pitching in on these threads. So it’s a bit of a self-selecting group…

For the average punter who has no knowledge or interest in pensions

And that’s the major problem. The lack of knowledge on something so important and fundamental to how you hopefully see out your days is criminal. With all the content available on YouTube you only need to spend a few hours getting your head around some basic principles and it will pay dividends.

Retire to the coast.

https://www.bbc.co.uk/news/uk-england-essex-66939904

Basic awareness of pensions (and credit cards etc…) should be taught at schools.  Dunno if it is now, but it wasn’t when I was at school and I was completely clueless until I landed a job by chance at a pensions firm.  Had zero guidance from my parents on it either.  Just wasn’t spoken off at all.  Maybe they were clueless too

I’ll be making sure my kids are financial aware.  Even it starts with Santa won’t bring you the entire of the smyths catalogue for xmas as he has a budget boringness

If this is your only pension other than the State Pension, it’ll probably block you from receiving far, far more in State Benefits and the like.

I can’t comment on what benefits are available, but if that was my only pot I’d be taking the 25% tax free lump sum and then drawing down just enough each year to keep me from paying any tax/ni. When it runs out I’ve got two state pensions and whatever benefits are available.

I don’t know that “most” people say that, but certainly its a number bandied around by people who have got used to a very comfortable standard of living

This get discussed on each STW pension thread. It’s up to each of us to decide if we would like to spend our retirement on 3 5* cruises a year, sitting in a studio flat with the lights and heating off or somewhere in the middle.

Personally, I am somewhere in the middle!

I’ve got one or two tiny pensions from the various jobs I’ve had over the years, last time I looked they would give me an income of £600 a year. The issue I’ve got is that I’ve never got onto the housing ladder (for various reasons) so saving into a private pension is pointless as I need to prioritize getting a permanent roof over my head. That is all but impossible for me unless I get a big windfall somehow, to even afford a small flat with it’s ripoff management fees etc I need to have a deposit of well over £60k thanks to a single income, my advancing age (42 currently so limited to 20 years mortgages) and that I’ve never earned decent money so the wage/multiples calculator screws me over. I have a review of it every year to see what, if anything, changes but it always gets further out of reach. Add in the crazy rental market and I’m resigned to working until I drop dead and never having financial stability. I worked out back in 2018 that if I went without everything – hobbies, holidays, car, takeaways etc – that I’d just about have enough to get a small place by 2045 but have crippling repayments due to only being allowed a short repayment term due to my age. Things are much worse now so I daren’t look into it again.

Sometimes it’s the reality that not everyone will get to retire, reduced hours is all I can really hope for.

Very few people can consider putting half your age as a percentage into a pension these days.

42 currently so limited to 20 years mortgages

You should be able to get a 25 year mortgage which takes you up to retirement age (which is, I believe, 68 for someone of your age).

Is there a difference between what someone will receive for their state pension depending on their age (ie, did the qualifying age change to get the current ‘full’ state pension) and if you miss out on it, you won’t get as much state hand-out? Or am I making that bit up?

Personally, I am not in a great position – I have around £80k in pensions (aged 56) and haven’t paid in for a few years due to circumstances – but we have just had a financial review and are having a ‘presentation’ meeting with the advisor shortly where they will, doubtless, tell us how screwed we are. My wife is 9 years younger than I am and it would be great if she could retire when I do, but I think I will end up working until she retires if my health allows. We are in a potentially ‘good’ position (I know it sounds heartless, but it *IS* the reality) in that her parents will have quite a decent pot for her and her brothers to inherit (assuming we outlive them and they don’t end up in nursing homes).

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.

I consolidated my trail of career pensions to date to reduce management fees and earn a rebate with the combined larger sum. Just doing that makes each year equivalent to 14 months payments in a year.

I should be lowercase ‘okay’ but I don’t have luxurious tastes.

At 52, your pension won’t have time to be any good size, but as other have said its still the most efficient way of saving but it does lock away your money. The next best is an ISA.

In your shoes, I’d start the pension with what you can afford, and down size as soon as you retire, then put your desired annual needs for the first year in an ISA to draw on demand, and put the rest into an investment portfolio managed by a cheap bot service. Advice from a human is valuable, but the managing of the portfolio by a real human has been shown to generally be no better than a bot, but more pricey.

The down side of using your downsize funds is that you’ll get clobbered for capital gains, which wouldn’t happen if you had the equivalent value in a pension.

I dont have any pensions after watching Mrs SSS’s dad lose the lot with Equitable Life, others getting stuffed with annuities in the wrong market conditions, friends getting pension schemes ‘red’ letters saying ‘please feed me more’, the govt having their sticky fingers in the pension pots occasionally and the spivs having a great time at your expense.

What have you done instead SSS?

after watching Mrs SSS’s dad lose the lot with Equitable Life

Yeah, my in-laws are in a similar situation – they should have been very comfortably off but then got shafted at the last. Partially because of the scheme he was in, partially because he was shafted by his employer and some very sneaky small print in his contract. They are doing very well, but they should have been in the position to be completely worry-free and being able to support their grand-kids through school/uni etc.

I have purchased property and land.
The main pension plan is to open a horse livery yard when i get a bit older as i have a small farm (purchased, not inherited).
This passive livery yard income with a bit of sideline farming and working part time should provide enough income.
I will develop some land as i get older and liquidate assets for income.

^ Fantastic advice for someone with no pension.

I dont have any pensions after watching Mrs SSS’s dad lose the lot with Equitable Life, others getting stuffed with annuities in the wrong market conditions, friends getting pension schemes ‘red’ letters saying ‘please feed me more’, the govt having their sticky fingers in the pension pots occasionally and the spivs having a great time at your expense.

I’m sorry but that attitude is plain bollocks. Sure, there have been some bad experiences for some but the Government Pension Protection Fund should stop these things happening again in the future with 90% of your pot protected.

I appreciate mortgage rates have/are rising, but the benefits of tax relief on pension payments I believe make more sense to add to pensions now than pay-off the mortgage early. I say that while over-paying on mine, but mainly because when my current low rate comes to an end on 2025 I’m not sure how much more it’ll jump to, so giving myself the pain of higher payments now to get used to it.

At 45, nearly 46 I’ve also started taking the pension contributions more seriously too, but until now haven’t really given it any thought other than ‘die early’ as a good plan. No kids to think about, no inheritance of any kind coming either, so if I want it, I need to get on with it now.

Personally I think dieing early is a terrible plan, I’m doing my best not to die at all, it’s going well so far, as currently I’m not dead 😀

My intention is to die young at around 87yrs old. That’s seemed to be around when my grandparents seemed to lose their quality of life.

As for the OP – create a Time Machine and go back and start paying a few quite into your pension from your first paycheck in your first job. Those first contributions at something like £20 a month have, due to compounding, yielded some of the best returns I’ve seen. My pension from my part time uni job is now worth more than the sum total I was paid over those couple of years!

If you can’t be bothered to invent a Time Machine, start putting as much money as you physically can into a sipp / pension now from this months’ pay check..

I’ll second the Meaningful Money podcast – he’s pretty good and advice seems pretty sensible for normal folk.

What’s Vanguard?

Vanguard is an investment company. Their founder “invented” low cost index funds. Traditionally your hedge fund manager would take your monthly £100 and buy and sell individual shares and charge you a few% for the privilege.

With vanguard’s index fund, when you give them £100 you just buy a fraction share of all the companies in the fund, or market and you average out the gains but mathematically more likely to beat the hedge fund manager over the long term.

Where Vanguard really win is instead of paying multiple percent in charges, because they’re trading less trying to guess the market, their charges are fractions of a percent. These reductions in costs mean that you have more money each month invested and doing the heavy lifting and as such increasing your returns even more…

An investment company. Vanguard is known for having low fees. Fees are important to ensure you maximise your return.

I understood at least some of that. Thank you.

Vanguard.

Personally I think dieing early is a terrible plan, I’m doing my best not to die at all, it’s going well so far, as currently I’m not dead 😀

Dying too late is also shit though

vanguard are a (the?) market leader in low fee / low (er) risk investment in the stockmarket.  They have a few options with various risk profiles.  Makes life alot simpler if you want to invest and not faff about and be charged a bunch of £££s for not much

This thread has prompted me to take a look at my old employer pension I hadn’t looked at for ages – paid into for 8 years, worth £52k, projected pa pension at 65 (20 years from now) is……..drum roll….. £1250, so £100 a month.

Perhaps worth looking at where that’s invested, who with and in what funds & what the fees are. In 20 years you could reasonably expect that to double in value twice, so worth circa £200k. £200k would likely offer a good bit more than £100pm.

Those figures seem a tad optimistic based on my recent reading, but never the less, the principle is sound.

I found that most default pension settings are unnecessarily conservative given the timescales of the investment.

The illustrations says ‘in todays money’ £1250 – so presume it’ll actually be more, but when you take off inflation and the like its the equivalent of £1250 today.  Well at least thats what I think it is saying to me….

Probably good advice to look at, its been sat doing very little for a long time.

If you can pay off mortgage and then dump that money and more into savings.

Makes sense, but not as an alternative to tax-efficient pension investing. Unless OP’s house is somewhere with astonishing house inflation.

I’m surprised nobody has mentioned this, but OP, don’t you have an obligatory little employer’s pension?

Perhaps it didn’t apply to your sphere of work/ company size, but it’s been obligatory for employers to contribute for the last 10 years. To ( try to) prevent situations like this from occurring.

https://www.gov.uk/government/statistics/ten-years-of-automatic-enrolment-in-workplace-pensions/ten-years-of-automatic-enrolment-in-workplace-pensions-statistics-and-analysis#the-amount-saved-into-workplace-pensions

Until 2018 the minimum contribution required under Automatic Enrolment was 2% of qualifying earnings, with a minimum of 1% contributed from the employer. In April 2018, this minimum increased to 5% of qualifying earnings, with a minimum of 2% from the employer. In April 2019 the phased introduction of AE was completed when the minimum contribution increased to 8% of qualifying earnings with a minimum of 3% from the employer.

< goes off to check if OP mentioned being self employed…>