How do I know if my work DC pension is on track?

[foolishdecisions]

Very strange to revisit this thread, but updating as I’ve shocked myself as well and maybe it would inspire others to make use of matched contributions if their employer offers it.

I’m 43 now and approaching 18 years of service and my fund value today is £500k, so that’s up £334k from when I wrote this thread back in 2019. Appreciate that the stock market has been in a bit of a boom time last 2 years, and the value I have in there could easily go down in a crash, but still really (pleasantly!) surprised where I stand at the moment. I’ll continue to save at the same rate of 11.5% but a few pay rises since 2019 mean I’m currently contributing around £6k and that’s matched by employer a year. I think the removal of the lifetime allowance has also been to my benefit here.

[tjh290633]

One point to remember is that a rate of return of 10% means that your fund will double every 7 years. That's without your contributions. You have about 24 years to retirement, perhaps, so £500k could become several million. Obviously where it's invested matters.

TJH

Very strange to revisit this thread, but updating as I’ve shocked myself as well and maybe it would inspire others to make use of matched contributions if their employer offers it.

[the0ni0nking]

I’m 43 now and approaching 18 years of service and my fund value today is £500k, so that’s up £334k from when I wrote this thread back in 2019. Appreciate that the stock market has been in a bit of a boom time last 2 years, and the value I have in there could easily go down in a crash, but still really (pleasantly!) surprised where I stand at the moment. I’ll continue to save at the same rate of 11.5% but a few pay rises since 2019 mean I’m currently contributing around £6k and that’s matched by employer a year. I think the removal of the lifetime allowance has also been to my benefit here.

I'm 44 - and only started working for the company I currently do in Oct-2011 - so I've had 12 years 8 months of contributing into the fund. Our employer matches contributions up to 9% so you have a nice little additional contribution from the employer compared to myself.

I've steadily upped my contributions over time as I've seen my salary nearly treble over that time (and for a period of time when I was on secondment it was c4x what I started on) and so to try and keep below the issue on the £100-£120k loss of personal allowance, my contributions now run at c25%.

As it stands, my pot is currently at c£269k so I'm thinking you've had some better investment performance compared to me! I've got two other pension pots from previous employment one of which is a DB scheme. I should really transfer the other DC one across to keep my housekeeping neater.

I could contribute more to my existing pension - but then I think what am I actually going to do with it if say instead of it being valued at £500k on retirement it was valued at £750k or £1m or £1.5m.

Sure, I could take a larger TFLS (subject to rule changes on this) but my retirement plan was not built around my pension - it is being built around having other streams of income to be able to live on such that any private pension or state pension can probably be drawn down and placed into trusts etc for other family members.

[moorfield]

One point to remember is that a rate of return of 10% means that your fund will double every 7 years. That's without your contributions. You have about 24 years to retirement, perhaps, so £500k could become several million. Obviously where it's invested matters.

TJH

Very strange to revisit this thread, but updating as I’ve shocked myself as well and maybe it would inspire others to make use of matched contributions if their employer offers it.

If you adopt an income strategy like HYP or ITs that reinvests dividends then you might expect overall income to grow through the combined effects of dividend raises cuts and reinvestment by 7-10% per annum. We have some empirical data to support that, here: viewtopic.php?f=15&t=28104 (I have suggested to the mods to make this a sticky thread on that board.) This is extremely useful because it unlocks all the excel functions like PMT, PV, FV that enable you to extrapolate much further into the future such as 24 years and build a pretty good picture of what your retirement might look like. You know what you have now, what you can save periodically, and where you might want to be, and that thread gives you a guesstimated growth rate you can use in those forumlae. The only thing missing is a rate of inflation which you would have to guesstimate.