Top up your pension

Claire Felgate

Claire Felgate

Some personal trainers will have a weekend gorging on fast food, there are doctors that get drunk more often than they should, and a number of accountants who go overdrawn.

Isn’t it comforting to know experts have their weaknesses, and don’t always heed their own advice? 

This is why I wanted to share my story. It’s no secret that we are facing a pension crisis, and women particularly may not have saved enough to leave work. Only 25 per cent of female respondents to BlackRock’s annual Investor Pulse survey in 2017 said they felt financially prepared for retirement - 25 per cent.

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One of the first steps we’re taking is to talk openly about the situation and how to navigate it. But from my own experience it is easy to miss this - or fail to take action – even if you work in pensions.

I talk to clients about DC pension savings every day and the importance of starting as young as possible, but a combination of gap years, extended study and a stint being self-employed meant that I didn’t start paying into my own pension plan until I got my first permanent job in my late 20s.

Even then I reduced the contributions from my employer to the lowest allowable level to increase my “cash for now.”

I felt virtuous, smug even, that the company was putting 7 per cent of my annual salary into my pension, blissfully unaware that it was nowhere near enough. I believed I was in control of my finances, saving into my pension alongside paying my rent, saving for a house deposit, managing my credit card spending, and enjoying life’s pleasures like going on holiday, or out with friends.

It was not until I joined BlackRock several years later, and took advantage of a new joiner offer to see a financial adviser, that I realised that I seriously needed to up my pension savings game.

“You should be putting between 15 per cent and 20 per cent of your salary into your pension pot if you want to get anywhere near two thirds of your final salary,” the adviser told me. What?

The words hit me like a tonne of bricks. 15 per cent to 20 per cent was more than double what I had been saving and I had already missed so many years. Did I really have to save that much for the future on top of covering my other outgoings (and let’s face it, living a bit) in the present?

The answer? Yes, I did, and with bit of planning I found it can be achievable. I did a budget and then I increased my contributions straight away but not to 15 per cent to 20 per cent of my salary.

That was a target amount that I would reach over time. I decided that I would set aside a portion of each future pay rise to increase my pension contributions. I also made a commitment to myself that I would save a decent amount of any future windfall like an annual bonus, birthday money or inheritance into my pension.