Tell me about pensions. Please. Bloody hell...

Discussion in 'education & employment' started by ShiftyBagLady, Aug 25, 2016.

  1. ShiftyBagLady

    ShiftyBagLady Thinks she is a flower to be looked at

    Right. I'm young and I'm anticipating a bit of ill health in my dotage so I need to be thinking about planning my pension to adequately support me, my yacht, my sprawling mansion and my staff. I know nothing about pensions. Fuck all. Please don't underestimate my ignorance here, talk to me like a child.

    I currently work part time in the NHS and I did tick the box for starting a pension, that started this year. I reckon I have 20-30years of work left in me. Limited savings. No property or investments.

    So where do I start? I will look up the details of the NHS pension. I ticked this box back in January and haven't thought about it since. It evidently seemed like a good idea at the time.
    Don't judge me :facepalm:

    Should I be trying to invest in a personal pension as well as a workplace one? Does one hedge one's bets with pensions?
  2. 8ball

    8ball Bar Bore Silver Medallist

    What you do is contribute a certain percentage of your salary, then your employer contributes a certain percentage of your salary, and you reach a particular point determined by external conditions, where someone extremely rich pockets the cash and you are left wanking dogs for coins down by the canal.
  3. Puddy_Tat

    Puddy_Tat hmm

    This is CAB page about pensions.

    Try and digest it a bit at a time.

    My understanding is (and i'm not a financial adviser or anything like that)

    Generally, it's worth being in a work pension, as employer will put money in as well

    If it's a defined benefit / final salary one (think NHS would be) then that's a much safer bet than a defined contribution (one where you put money in and don't really know what it will all be worth at retirement)

    Don't think there's anything to say you can't have a personal pension as well - or there may be an 'additional voluntary contributions' one with work.

    That's about as much as I can manage. It's late.
    ShiftyBagLady likes this.
  4. pseudonarcissus

    pseudonarcissus fluttering and dancing

    Tick yes to an NHS pension. Whenever you get a pay rise put some of it into added voluntary contributions or something similar on the assumption you won't miss the rise you never actually saw.

    There is a lot of scepticism here about pensions, but a lot of people will really struggle if they don't make a significant effort. State pensions will keep you about the poverty line, unfortunately.

    An old fashioned scheme where you get about 1/60 of you final salery per year of service (ie retire on about 2/3) costs someone 35-44% of your salery. I crude rule of thumb for defined contributions is you can draw down 4% so £1/2 million in the pension gets you £20k pension. It's scary, but you're young and have a public service pension. Pension contributions are tax efficient.

    Oh, and buy a lottery ticket. I'm going to retire on Euromillions .
    ShiftyBagLady likes this.
  5. Puddy_Tat

    Puddy_Tat hmm

    And just a thought - if you do, at some point down the line, leave this job - you will probably be able to 'freeze' the pension, so that you'll get however many years of service worth x whatever your final pay there is.

    although that 'final pay' will get uprated with inflation.

    that didn't used to be in the schemes - mum-tat was due a pension of something like five pounds two shillings and sixpence (a year that is) when she turned 60, as a result of having been a clerk in the gas board for a year or so in the 60s.

    (as it was a silly amount, they offered a lump sum instead)
    ShiftyBagLady likes this.
  6. High Voltage

    High Voltage In the top 97% of Urban's most interesting posters

    Usual, I am not a pensions or financial chap

    This appears to be the current state of play for the NHS Pension

    it's understandable in bite sized pieces - probably

    Anything that a company contributes to will usually be better than a private pension - purely because you're getting extra money put into it

    The earlier you start a pension the better - when I started I was "told by a financial advisor" that anecdotally - if you start a pension at 21(?) and pay into it for 5 years(?) and then stop paying, by the time you retire the money in that pension will give you in the region of 1/3 of your pension - I put money into a pension at 21 (I'm now 55) I've recently had a pension review (i.e. I contacted all the pension I've got to get an up to date statement) and low and behold that pension, the one I first took out and didn't really put much money in was indeed worth a lot more than I thought it was going to be be worth - not the millions that your, quite frankly perfectly understandable, chosen retirement lifestyle would need, but worth having

    Looking at the link I've posted it doesn't look like the NHS pension is not a final salary pension, which is a shame - but

    Which is good

    This is what needs understanding and I'm not a pensions bod so I can't help but this CARE thing needs fully understanding - it's the REVALUED bit that's ringing a bell with me

    The the 54s does sound promising - it "sounds" like for each year you're paying into the pension scheme you get 1/54s of "something" - I'm guessing it could be an average of your salary for as long as you've been in the scheme - with final salary it worked on your final years salary - now it looks like it will include the starting years through to the final year and an average of that (so it'll be LOWER) than your final salary - FIND OUT IF YOU CAN BUY EXTRA YEARS - if you can then buy as many as you can as often as you can, up to the maximum you're allowed to have - if you can hit 54/54's then you could be on your final AVERAGE career salary - I doubt you'd be able to get this amount but it would be a damn good target to aim for

    Anyway - it's all probably bollocks, so get some proper financial advice - pensions, you don't want to fuck with them
    ShiftyBagLady likes this.
  7. Winot

    Winot I wholeheartedley agree with your viewpoint

    Does your workplace have someone you can discuss this with ShiftyBagLady? Sometimes that can be easier than reading loads of stuff.
  8. fuck seals

    fuck seals Well-Known Member

  9. Puddy_Tat

    Puddy_Tat hmm

    yes - should be someone in the organisation if not the workplace.

    they will not be on commission, but they cant tell you "you should do x"
    Winot likes this.
  10. Pickman's model

    Pickman's model Starry Wisdom

    Tbh the executive summary with pensions is we're all fucked. I worked five years pt for *a well-known local authority* and I've two years pension built up. My other pension, six years in the scheme, three years pension, no one I know has any expectations of anything but penury in auld age. The annual letters come round detailing benefits and it's something like £3k per year if you're lucky. Frankly I'm much better off dying in service when there's something like £40k I'd be able to leave in my will.
    ShiftyBagLady and Sprocket. like this.
  11. Sprocket.

    Sprocket. Rollin, rollin...

    Having worked at a few companies I have bits of pensions dotted around as well as bits of private pensions that basically work out that I will get less back per month than my last premiums.
    Most of the younger lads I work with have not bothered with pensions as they were fortunate enough to inherit property from their families. They are now renting these out and saving the money in any way they can to get better percentages.
    The more I hear of private pensions the more I feel they are only there to benefit providers.
    I would urge anyone working in the public sector to join the offered pension scheme, it is inflation proof and also receives above average funds from the employer.

    I also hear the young workers where I currently am speak of the ISA for life plans that are to be offered by the government to those under forty, although I fear this developing into replacing the current state pension.
  12. fuck seals

    fuck seals Well-Known Member

    No, we're not.

    With only 5-6 yearsin the scheme your returns are likely to be pretty dismal. This is also dependant on the scheme type.

    In general pension returns track with major markets - which are high atm - and are dragged back by prevailing admin charges.

    With the 20-30 years of contributory work slb is looking at, her pension should be fine.
  13. Pickman's model

    Pickman's model Starry Wisdom

    Yeh? :D the pension fund where I am now is in deficit, they've shifted everyone off final salary to car, and as I say *no one* I know anticipates anything other than penury in auld age. Yeh I hope it's different for ShiftyBagLady but it's foolish or worse to tell her it'll turn out nice again.
  14. Sprocket.

    Sprocket. Rollin, rollin...

    Can I also take the opportunity to advise people as I did a young lad at work last week that death in service payments will be made even if you are not at work when your death occurs! This really happened. :facepalm:
    Pickman's model likes this.
  15. fuck seals

    fuck seals Well-Known Member

    You underline very well why it's important to do the due diligence on the scheme.

    Schemes with fixed payouts against funds do run the risk of lack of liquidity. Such as final salary pensions. This has happened quite a bit over time.

    At the very least you should understand the underlying funds and investments in that scheme, who it's managed by, the sectors used and so on. Otherwise, as you say, you're just throwing your money in and praying it'll turn out nice again. And you should not do that with money.

    There are plenty of other scheme types. Risk is higher in some, lower in others.

    The most common scheme provides units in the underlying instruments, rather than a fixed income promise. These cannot suffer from the repayment/ liquidity issue you outline. They can however fall in value as they track the value of the underlying instruments in the fund. Think of them as shares/ equity and you won't be far off.

    I'm not giving advice, but your understanding of pensions and associated risk is low.
    Last edited: Aug 26, 2016
  16. spanglechick

    spanglechick High Empress of Dressing Up

    My attitude is pay in but don't obsess too much over what the benefits will be, because they'll have moved the goalposts by then. My pension will be fuck all resemblance to the one I signed up for, and my contributions have doubled for worse payout which I won't get til much later. But what can you do?
  17. High Voltage

    High Voltage In the top 97% of Urban's most interesting posters

    The problem with pensions is you have to make decision NOW, based on your understanding of things are they are NOW about something that's going to be happening in 10s of years time, by when, the rules might have changed - the closer you get to retirement the likelihood of the rules changing to affect you are less likely, but change they could

    And it's your decision - you can get independent advice, but it'll only be advice not "you should do this to get this" (mis-selling anyone??)

    So you make your guess, and plod on - and then 30 years later your better half suggest finding out what your pension could look like - you write to all the pension people you've got frozen pensions with and wait for the letters to come back and you also get in touch with the DWP and ask for a pension "thing" (can't remember what it is but if you go on the DWP web site about pensions, there's a number which you can ring, and you speak to someone and you ask for what your pension is going to be when you retire and you give them your NI number and your name and a couple of weeks later you get that through the post as well

    Then you add up all the figures, which will be figures based on TODAYS values, but projected to the future and you get a total amount and you say to yourself - could we live on this?

    Bearing in mind that the mortgage'll be paid off, the kids (if you have them) will have fucked off, you're probably only going to be running one car (or not running a car at all) and stuff like that - so if your combined amount is £20k could you do what you want to do TODAY with that amount and if the answers Yes, then, probably, you're going to be OK - but if the answers no, then you're fucked - because in the 10 or so years you've got left to pay into your pension you're not going to be able to put enough in to get to where you want it to be
    PursuedByBears and fuck seals like this.
  18. Teaboy

    Teaboy It definitely looks brighter over there..

    If your employer is offering to pay into a scheme then you may as well take it. Obviously you have to chip some of your own cash in as well but if you don't opt in then the employer just keeps the cash.

    As I work in a pretty volatile industry (construction) I've moved job a fair bit so I've got about 5 or 6 various schemes knocking around with anything from £3k to £10k in them. I have little expectation that they will be worth much if I make it to retirement but they might pay for one last big holiday.

    The problem with private pensions is of course that they take your money and get gambling on the stock market. At the start they take risks with the theory being that they take less risk as you get nearer to retirement. Problem being though less risk used to mean things like shares in BP or Tesco or UK government bonds - all of which are pretty crap at the moment. So all in all a lot of luck is involved in both how well your coke addled fund manager has invested and what the global financial situation is when you hit retirement age.
    fuck seals likes this.
  19. Teaboy

    Teaboy It definitely looks brighter over there..

    Anyway, everyone in work should have a pension now with their employer contributing. Its that People's Pension thing.
  20. mauvais

    mauvais change has become unavoidable

    The Money Advice Service's Pension Calculator is a useful - and terrifying - thing. You will need to know what your final salary pension is likely to pay though.

    Personally, I wouldn't count on the state pension surviving until I retire in 30 years or so.

    OTOH, as I said on the middle class thread, the pensions crisis - people's lack of provision - will cease to be a concept and become something that is lived, so the whole landscape will probably look very different then anyway.
    kebabking likes this.
  21. danny la rouge

    danny la rouge Without music, life would be a mistake.

    Automatic enrolment. It's still being rolled out.

    I'm in work but I don't get it and won't. I'm self employed. I should picket myself.
    metalguru likes this.
  22. Teaboy

    Teaboy It definitely looks brighter over there..

    Really? That advert with the monster from an acid induced hallucination seems to imply that everyone should be in it now?

    One out all out.
  23. marty21

    marty21 One on one? You're crazy.

    I started contributing to a work pension when I was 30 , should probably have started when I was about 7 :facepalm:

    I'm in the Public Sector scheme which isn't gold plated :( and I also pay into a private one which I started when I left the public sector for about a year and have kept on.

    Looking at my forecasts as you tend to do more in your 50s:D I might be heading down that canal for pennies :hmm:
  24. High Voltage

    High Voltage In the top 97% of Urban's most interesting posters

    I probably agree with you - given that you're 30 years away from state pension (67 or 70 or 75? that's the next guess)

    it could be argued that if an announcement was made NOW telling people of your age group that when they retire the state pension will have been frozen at 2016 values or stopped you've still got time to do something about it - how you'll afford to do that is not their problem - but you've got time

    Me and Mrs Voltz? we're 12 years away from state pension retirement age (67) - I'd find it unlikely that anything's going to change drastically for me and people like me as there's fuck all time to do anything about it, so, cautiously, I "think" we're going to be just about OK

    It's the youngsters who aren't even thinking about pensions because they've got massive student loans and then housing to worry about, so a pension is not even on their radar - I genuinely believe that privately owned property is the last bit of the "family silver" that the government will try to get there hands on - they've started now with using a lump sump to pay for your health care, which is a charge against any property owned - but I can see this vast, untapped wealth becoming a target for government at some time. Not this year and not next year - but if the pension black hole has to be filled it'll be too tempting for them. After all what do you need a house for when you're dead
  25. danny la rouge

    danny la rouge Without music, life would be a mistake.

    Employers have been given dates by which they are supposed to be up and running, but those dates are not all reached yet. It's a staged approach, largely because there isn't enough provision. Pension companies don't want to provide the products, especially to SME employers. It's apparently all a bit of a mess.
  26. mauvais

    mauvais change has become unavoidable

    Also I made a spreadsheet using MAS' assumptions, and some assumptions of my own - that I would draw the pot down from retirement onwards, rather than live off any further growth - and I worked out I need £2m in there. Always good to enter your own demise into Excel and come out with a massive lottery win number, I think.

    Now I have two options. I could actually run with that, and pay all my spare cash into a pot until I retire, and hope nothing terrible happens especially towards the end. Or worse, that I don't live past my use-by date and scupper it anyway.

    Or, I could outright make my retirement strategy doing as little work as possible between now and then, buy a Maserati, and end it all at 65 with a one way ticket to Switzerland/into a local bridge support etc.

    Fun times eh!
  27. mauvais

    mauvais change has become unavoidable

    Yeah, that's a moving target too. I'm 32.

    I also worked out what would happen if I wanted to retire ten years earlier. I'd need double.
  28. ShiftyBagLady

    ShiftyBagLady Thinks she is a flower to be looked at

    Thanks everybody for your input, it been really useful and I'm reading and researching everything's everyone has said. It's a slow process.
    I do not and will never own property I just don't have the money and I doubt I ever will. So it's likely that I will need a state pension/benefits/whatever pittance is available to be at retirement. I read at paying into a private pension can mean you're not entitled to benefits so that's something I'll have to bear in mind as it's unlikely I'll be able to contribute enough to a private pension to give me a good return. My best bet is to pay a little extra into my employers pension, I reckon. I'm also going to have to try and work full time at some point to which will be difficult (health problems) but may be worth a few years of difficulty...

    It's all speculative (frustratingly so) but it's good to have some sense of what the prudent thing to do may be. I will go and speak to somebody at work about it in the near future, that's a good suggestion :)
  29. Pickman's model

    Pickman's model Starry Wisdom

    so i got my workplace pension annual statement today and if i continue paying into it until i retire i'll get a lump sum of £17,700 plus an annual pension of £5,941.65.

  30. High Voltage

    High Voltage In the top 97% of Urban's most interesting posters

    Plus state pension which at today's rate is £6,550 pa

    Don't take the lump sum and see what that does to the annual pension - it's going to go up, not double mind, but it will go up

    So that should put you on "around" £12,000 pa - again, not great - and without knowing how old you are, you "might" have time to do "something" about it, maybe
    Pickman's model likes this.

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