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Private Pension Pot to rival State Pension

Posted: Thu Jan 31, 2019 5:04 pm
by planteria
i thought this was simple but interesting..

https://www.fidelity.co.uk/services/sip ... 0ifQ%3D%3D

Investing to build up a pot of £255k takes some commitment. :think: On the other hand, i suppose a State Pension 'Pot' of that value is nice to have alongside any other investments.

Re: Private Pension Pot to rival State Pension

Posted: Fri Feb 01, 2019 6:09 pm
by milo55
interesting

Re: Private Pension Pot to rival State Pension

Posted: Sat Feb 02, 2019 5:32 pm
by planteria
i'm pleased you agree haha.. provision for retirement is going to become a major issue in the next 20 years.

Re: Private Pension Pot to rival State Pension

Posted: Sun Feb 03, 2019 5:25 pm
by AAAlphaThunder
Sarah is very knowledgeable in these matters.

I wonder what Sarah makes of it?

Re: Private Pension Pot to rival State Pension

Posted: Mon Feb 04, 2019 6:56 am
by pabenny
You need to have 35 years' National Insurance contributions paid or credited to qualify for a full state pension.

If NI contributions were paid to a notional fund with investment returns of 2%, the total contributions (EE and ER) payable on median earnings would give a fund of around the £250k mentioned.

Before anyone else says it, NI funds today's pensions and benefits, and a person's contribution record is essentially an eligibility criterion - the amount paid does not directly affect the amount of state pension or benefits received.

Re: Private Pension Pot to rival State Pension

Posted: Mon Feb 04, 2019 8:26 pm
by kevinchess1
But didn't they try this with SERPS

Gave up on that if I recollect

Re: Private Pension Pot to rival State Pension

Posted: Mon Feb 04, 2019 9:17 pm
by macliam
The whole pension thing is up in the air for those of us "on the cusp". I won't get mine until I'm almost 66, but I double checked my situation today - it turns out I already have 37 full year UK NI contributions and several partials (from student days and being "self-employed" (supposedly). Of course, nobody gives tuppence about the contributions I paid in Ireland, too few to qualify for anything much there, but showing as big gaps in my record here.....

Then I was "contracted out" for several years, so I get slammed for that. The outcome is that I'll end up with about £20 a week less than my "optimum", based on my current position. But then, if I pay my NI stamp for the next 2 years and also for the last two, I can make up that shortfall at the bargain price of £3k or so!!

Confused? I was, so I called the pensions helpline (well, I had the odd 40 minutes or so to burn....) Eventually I got the lowdown from them - and it's worthwhile, because you need to be so careful - I could actually pay a further 3 years past NI conts and get absolutely no benefit at all, just donate £2k or so to the exchequer's purse.

In the end, I'll probably pay the 4 years NI conts to maximise what I get, as, apart from paying me an extra £900-odd a year before tax, it will increase the proportionate amount SWMBO would get should I pop off - and it'll pay for itself in about 4 years..... so that''s a good reason to keep breathing!!

Re: Private Pension Pot to rival State Pension

Posted: Mon Feb 04, 2019 11:40 pm
by Sarah
Generally, the earlier you start investing and the longer the time frame, the more potential you have for your money to grow because of the power of compounding, which is when you earn interest on top of interest, making your savings grow even faster.
I think this is the key bit to take away from the article, although it's not new advice. If you want a more comfortable retirement then save what you can earlier in life and throughout your career. I wouldn't regard a £255k target as particularly ambitious really - anyone serious about their private pension should surely be thinking about putting away a double digit percentage of salary and preferably more if affordable. Minimum contribution levels are exactly that - the least possible. The tax relief available on pension payments (especially for higher rate payers and/or when contributions can be taken through a salary sacrifice scheme) also makes it more worthwhile to put your earnings towards your retirement.

Re: Private Pension Pot to rival State Pension

Posted: Tue Feb 05, 2019 6:55 am
by AAAlphaThunder
Sarah wrote:
Mon Feb 04, 2019 11:40 pm
Generally, the earlier you start investing and the longer the time frame, the more potential you have for your money to grow because of the power of compounding, which is when you earn interest on top of interest, making your savings grow even faster.
I think this is the key bit to take away from the article, although it's not new advice. If you want a more comfortable retirement then save what you can earlier in life and throughout your career. I wouldn't regard a £255k target as particularly ambitious really - anyone serious about their private pension should surely be thinking about putting away a double digit percentage of salary and preferably more if affordable. Minimum contribution levels are exactly that - the least possible. The tax relief available on pension payments (especially for higher rate payers and/or when contributions can be taken through a salary sacrifice scheme) also makes it more worthwhile to put your earnings towards your retirement.
I was waiting for you to...

Re: Private Pension Pot to rival State Pension

Posted: Tue Feb 05, 2019 9:35 am
by Sarah
Well... hope you weren't disappointed! :)