Who is paying for your pension ?

Posted by: Don Atkinson on 02 February 2014

Who is paying for your pension ?

 

I ask this of anybody with a UK public servant pension, which includes Gov Officers, Local Authority Officers, NHS staff, Teachers, Policemen, Firemen, etc etc  It also includes quasi government organisations such as Network Rail, train drivers and other ex employees of British Rail, and similar “privatised” organisations where employees retained their pension rights under their Tuped transfers.

 

For those in the private sector where final salary pension schemes are largely a thing of the past, I would ask….

 

Who is living off your lost pension ?

Posted on: 24 November 2014 by Bananahead

The current contributions to my company pension fund is 36.5% of which I pay 9%. Then there is the state scheme that provides a basic income. I also save about 5% into a seperate pension account.

 

And I still wonder if it is enough.

Posted on: 24 November 2014 by Mick P

The answer to that is your age.

 

If you are 20 years of age, then great, if you are in your fifties, then not enough unless you have a good portfolio behind you.

 

Mick

Posted on: 24 November 2014 by Don Atkinson
Originally Posted by Bananahead:

The current contributions to my company pension fund is 36.5% of which I pay 9%. Then there is the state scheme that provides a basic income. I also save about 5% into a seperate pension account.

 

And I still wonder if it is enough.

Keep the maths simple.

 

Start saving at 20. Retire at 60. Die at 80. No inflation or other external factors.

Assume you earn twice as much at 60 as you did at 20 with a simple, linear increse each year. Assume you wish to have 2/3rds of your final salary until you are 80.

Work on a starting salary of £1k pa

 

Salary at 20  = £1,000

Salary at 60 = £2,000

Average salary = £1,500

Total working income = £1,500 x 40 = £60,000

 

Required pension = £1,333

Total required pension = £1,333 x 20 = £26,667

 

% of savings required to fund the pension = 44%

 

Yes, I know its a lot more "complicated" than that, but as Mick says, we need a significant change if we want to secure 2/3rds final salary schemes.

 

Posted on: 24 November 2014 by count.d

http://www.invidion.co.uk

 

A number of great finance calculators here.

Posted on: 24 November 2014 by Don Atkinson

I should have included the benefit of lending the pension savings to somebody as they accumulated then dwindled over the 60 years from 20 to 80 - Assuming there was somebody to lend to. lets call them "Santandandare" and work on them providing 2%pa on their borrowing.

Posted on: 24 November 2014 by Don Atkinson
Originally Posted by count.d:

http://www.invidion.co.uk

 

A number of great finance calculators here.

I particularly liked the

"Countdown to Death" and the

"Triviality (cashing in pensions)" calculators....

 

Great shout count,d