Quote:
Originally Posted by stevegreen
I personally don't think that any pension will be worth that much at retirement age...
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Well, for starters, your 18 years final salary scheme benefits should be pretty decent.
Assuming it works on 1/60th per year of service then you'll get 18/60ths of your salary at the date it stops plus they normally then revalue this each year by something like the lower of 3% and inflation.
So - whatever your salary is now - you should get just under a third of it as a pension from the final salary scheme.
As to money purchase arrangements, it all depends how much you put in and the later you leave it the more you have to contribute. Some rudimentary calcs suggest that I (at age 39) need to put in at least £500-£1000 per month to get any sort of decent income at age 60. That's assuming growth of 10% per year (quite possible) and annuity rates of 7% per annum (about right for a 60 year old male).
At the end of the day whilst the chancellor disgracefully pocketted tax credits on dividend payments earned by pensions schemes they remain a sound investment:
1. Contributions receive tax relief at the highest level
2. Fund grows tax free (only dividend income is taxed)
3. Part of the fund can be taken tax free at retirement
Matt.