My Pension mess and how I am going to fix it
I am in period of transition. Everything in life is a little bit ‘up in the air’ and we are assessing everything. This includes our financial situation and in particular our future. I am talking about pensions, savings and investments. I feel like I have a pension mess and that we are not prepared for the future. The average age that current 65 year olds live to is between 83 and 85 according to the national office of statistics.
Potentially I have another maybe 40-50 years on this earth. I do not want to work for another 50 years maybe we could travel the world. Hey I didn’t do it when I was 18, so why not do it when I am 60. So I need to start planning a) what age to retire and b) how much money is needed for these years. I urge you to think about this. My research has scared me into sorting something out now.
Our Financial Future
We have a house with an outstanding mortgage of 40% of the value of the house. We thankfully have a nice chunk of equity. Much of my life, since 23 when I bought my first house, has been about paying off a mortgage. The problem here is that we cannot access any of this money unless we were to sell the house. We cannot re-mortgage at the moment due to lack of self-employed earnings.
We are a bit rubbish here. I have a stocks and shares ISA that has been invested in since I was 22 BUT I needed that money when we extended the house 3 years ago. I have a few shares in Tesco, bought when price was high, currently half the value I bought them for. There is very little money here!
My Pension Pots
I know I have pensions somewhere. I definitely paid money into pension pots when I worked at previous companies. It is likely you are in the same situation as me, do as I have done and get a handle on your situation.
I know that I did not pay into a fund in my 20’s when I worked for HSBC & Tesco, why not? I remember the HSBC scheme was only open to over 25’s. I joined Tesco aged 27 and I remember thinking that I did not have enough spare cash. How silly was I? I didn’t have children and my mortgage payment was only £800 per month. I did have the spare money. For every £100 I could have contributed they would have matched this, and it was tax free. This was really not a sensible decision.
Searching for Paperwork
I have dug around in my paperwork and found the details of the 2 pension funds I do have from when I was employed by Threshers and EE in my 30’s. One with Zurich and another with Legal & General. I called both of them up and got details of the investment fund name, the management fees and the value of fund and how this has changed over time. I got the fund fact sheets for both. I am now fully informed.
I do have a pension!
So it turns out I have £40k invested in these pension schemes. Hooray I cry as this is way better than I was expecting. Both schemes are growing at around 6-7% per year which is not too bad, and the management fees of 0.46% and 0.6% also don’t feel too bad. But both schemes are closed and I need a scheme that is open to further investment. Another fact I have discovered in my investigations is that some pension funds will charge you for inactivity, you can read more about this here. You will actually get charged for not paying in…how ridiculous!
Once I had all the facts I called up the beekeepers at PensionBee. PensionBee will consolidate your previous employment funds into one (honey) pot. This fund will then be invested in a risk level and fees level plan of your choice. They will do all the chasing of the previous funds provided you can give them a few details such as plan number and previous company name.
There are 3 funds available to me, held with 2 very reputable pension companies BlackRock and State Street. Each has a different level of risk and thus return. I just need to have a good look through the fund fact sheets and choose a fund to have my current pots transferred to. I’ll then be able to view my current pot size, my projected retirement income, and set up regular or one-off contributions online via the BeeHive
Please be aware that any form of investment can go up and down and you may want to consider advice from a qualified IFA. Just make sure they are recommended by a trusted friend and check their investment levels as some will only work with clients with an investment level of at least £150k. This post was written in collaboration with PensionBee.