Pension Pennies

Oh the joys of a pension statement.

I received my 6 monthly pension statement for one of my personal pensions today. Stark reading really, I can now see why I have been excluding my pension funds from my honey pot calculations.

I have continued to save £100 per month into this scheme even after quitting work, mainly to collect the extra tax credits, part of a diverse basket of saving options. The fund total has dropped since the last statement, [the funds are index trackers rather than managed]  so as well as the fund being down, my contributions have amounted to nothing.

It is this aspect of pensions which demoralises you. You save hard and get statements showing that the pension is worth less than last time – and that is with you contributing monthly. Ouch! It feels like I am treading water  (drowning) with pension schemes. Every time I move job, I am enrolled into another new pension scheme and have lots of small pots of money that need to be cleverly moved and consolidated to make any decent headway in the growth front.

Also, the pension forecast, no wonder people as really annoyed with pensions. I have been tracking the forecasts received over the years to see how they compare and each time I receive a statement, the forecast lessens in value! This time they have calculated the value based on a 5% annual return and a 3% inflation rate. So when I reach 55, in 8 years time,  I will potentially receive a pension of £620 PER YEAR , yep, per year when I really need that value PER MONTH to cover my basic living expenses, if I was relying on just a pension for support.

My sister had a pension statement through earlier this year and she said her pension forecast is for £750 per year and that is after she has continued saving right up to her NRA (approx 20 years), the pension is provided by the local council.

If the state pension does disappear before we reach NRA, I dread to think how we would live. My sister’s contingency plan is that we share a house and we split the living costs and use the money from selling one of our houses to fund our living. A nice idea, as the economies of scale kick in.

Right now, its time to update my pension spreadsheet and try and contact one of my other providers as I don’t seem to have received a proper annual statement from them for well over 2 years!



4 thoughts on “Pension Pennies

  1. What I’d love to know and find out is what I’m actually charged every year on my company pensions. I have a vague notion that this is one of these murky areas where the financial companies are ripping everyone off so badly that it should be a national scandal. Whatever you get as a pension they’ll be taking a slice of it. I think this cost should be shown on any annual pension statement you get. I got a statement recently from a big corporate I used to manage who have a few billion pounds in their funds (thousands of employees going back years). I wonder what the charges – all the charges – on this pile of cash is?

    • Yes, I think there is a murky area existing which only those working in the area know. I get periodic company pension statements and all they say is what the pension payment will be – you have no idea what is being taken out of them in fees. You just get a final pension value, at least with my DC pensions, I can see what the fees are and how my fund is growing – or not over the years.

  2. It’s interesting that you imply that the fund total is worth less since the last statement because it is an index fund rather than an actively managed one. Presumably you are aware that most managed funds are closet index trackers anyway, only with higher fees?!

    • I was just commenting on the fact that this pension fund has not grown, even with the monthly contributions going in there. I just find it annoying that every 6 months I look at the pension statement and all I see its value either level or moving downward, it just feels like I am pouring my money down a drain.

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