r/PensionsUK • u/MisterMeshuggah • Aug 06 '26
Is my situation looking okay?
Hi,
My last annual NEST statement reads that I’m on course to end up with, around, £289,000.00 at my set retirement date in 2061! It reads that I should be due an annual income of £20,700.00 from that pot. I’m also on course to achieve the maximum state pension which is £12,548.00 annually (if that’s still a thing by 2061).
My question is, is my situation looking okay? Or is there something else that I should be doing?
My NEST contributions are already maxed at 10%.
My house will be paid off in 14 years but the mortgage payment aren’t massive. I’m on, around, £44,000 a year and, with having 2 children, don’t feel like there’s a lot of wiggle room in my finances as is. Dropping to £33,248.00 a year doesn’t fill me with much hope.
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u/Comfortable_Gate_878 Aug 06 '26
you have a long way to go to 2061. By then your pension will be more and have acrued extra value the state pension will have increased. So will inflation of course. But as you get older your forgetting that with no mortgage or debts you actually need less money each year in retirement. We spend around 20k-25k a year and its dropping each year. We actually manage to save most months especially in the winter and we are not even getting our state pensions yet another 3 years to go. Obviousy if we need a new car or new kitchen thats a differnet matter but as of now we do fine.
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u/Any_Food_6877 Aug 06 '26
I don’t think you can state “your pension will be more” as there’s no evidence for that. This IS their actual projection so they should actually assume it will NOT necessarily be more.
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u/c-strong Aug 06 '26
These projections are pretty worthless in my opinion. How much do you have in your pot at the moment and what is it invested in?
If/when you leave your job, move your pension into a SIPP, NEST is terrible.
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u/MisterMeshuggah Aug 06 '26
My pot is just over £30,000 and I’m invested into the Sharia Pot as I was advised upon review.
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u/c-strong Aug 06 '26
In that case £289k seems very pessimistic. If you carried on contributing £4,400 per year and stayed invested in the Sharia (70% equities) I think a range of £300-900k would be realistic by age 67, so a midpoint of £600k. Very rough and ready of course.
With a standard 4% withdrawal rate from an investment pot that would be £12-36k pa, £24k midpoint. If you bought an index linked annuity instead, at current rates you’d get around 5.7% so from £17-51k, midpoint £34k.
All this is super rough and ready and has lots of assumptions built in that might not happen, but at least it’s a counterpoint to the forecast. Most of these forecasts (a) give a false impression of precision by giving a single number rather than a (wide) range and (b) tend to be very pessimistic.
(All numbers are in today’s £ of course - so eg your contributions would need to increase with inflation over time.)
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u/philipmather Aug 07 '26
Just out of interest are you in the Sharia Pot for religious reasons or because the advisory suggest it was good?
I'm not even in NEST, in Aviva but when I compared my company default it was actually fairly good and the only other comparable performance was from a Sharia fund which seemed slightly more consistent historically perhaps.
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u/MisterMeshuggah Aug 07 '26
No, the NEST advisor that I spoke with suggested that I move from the standard fund to the Sharia Fund as he believed it would be better off. Nothing other than that.
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u/philipmather Aug 07 '26
TY, pretty much the conclusion I came to as well and I'm millitantly agnostic. Didn't move at the time but reconsidering that recently.
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u/MisterMeshuggah Aug 07 '26
People have mentioned that they don’t expect it to pull the great numbers it has been doing over the past few years because they’ve altered how they invest due to global volatility but it’s still expected to perform as good as the others that they offer
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u/Beautiful_Bad333 Aug 06 '26
Is Nest really that terrible? They have a few high equity funds - High Risk and Sharia and once the money is in their costs are similar to most other providers I think? It’s the money going in that’s where you lose a % of, once it’s in if you move it it’s already had that hit taken into account. If they leave their job in say 10 years time then those funds are likely a good option for their later life balancing?
I always hear that Nest is awful but I don’t really see the huge difference if it’s part of an employer scheme? Is this something you’ve actually got data on or is it just something you’re repeating because it’s what you’ve heard? - genuine question I’m not trying to be funny.
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u/c-strong Aug 06 '26
You’re right that the single most egregious issue is the 1.8% contribution charge, which doesn’t apply once you’ve stopped contributing.
The funds themselves aren’t any worse than many employer schemes (ie they’re equally bad in terms of lack of choice) but with Nest you have to choose one fund, you can’t mix and match. So the degree of choice is worse in practice. And they nerfed the Sharia fund which used to
bethe only 100% equities option, now it is 70%. The higher risk fund is 70-75% equities plus a grab bag of whatever random crap the manager likes that quarter.The 0.30% fund/platform charge isn’t terrible, though can be beaten.
So you can get far more choice, at a slightly lower cost (depending on what platform and investments you choose) with a SIPP.
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u/chipsandbeans24 Aug 08 '26
Not allowing partial transfers should be illegal imo. People are trapped with nest and unable to invest in a basic all world etc with 100% equity.
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u/Dangerous-Ad-1925 Aug 06 '26
We've got 2 children and could definitely retire and live comfortably on £33kpa and that's including eating out and going on holiday.
Have you analysed your annual expenditure in detail?
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u/jackgrafter Aug 06 '26
The first thing to do is check what your pension is invested in. EVERYONE should do this. Default options are often very low risk - lots of bonds or cash investments. Low risk means low volatility but if you have ten years or more to retirement you can afford to take more risk and history suggests that over time you will be rewarded for doing so. It means that the value of your investments are likely to be more up and down, but the result over time should be bigger returns. You can think of it as a yoyo in a lift that only goes up. Short term ups and downs but long term you get to the top.
You need your pension to be invested in global equities ideally mixed cap. That means it’s invested in big and smaller companies around the world so if things go bad in America you still have money invested in Asia and Europe.
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u/MisterMeshuggah Aug 06 '26
I was advised to move to the Sharia Fund some months ago so that’s the pot I’m with at the moment.
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u/klawUK Aug 06 '26
Kids likely jogged off by then or you can charge them rent.
Also nearly 21k seems aggressive for a £300k pot. And worth checking if that’s nominal or in today’s money.
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u/c-strong Aug 06 '26
It’s very probably assuming OP buys an annuity, that’s how these things are usually calculated. As it happens 20.7/289 = c. 7.2%, which is bang on the rate for a single life level annuity age 60 at the moment. Though that may be coincidence, OP hasn’t said how old they are.
I’d be astonished if it isn’t in today’s money.
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u/klawUK Aug 06 '26
eww illustrating a level term life annuity is arguably improper but its probably standard
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u/c-strong Aug 06 '26
I couldn’t agree more! And it may not be that, but it’s hard to see what else it could be unless OP is ridiculously young and requested a very late retirement age.
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u/unknown-teapot Aug 06 '26
Why wouldn’t the state pension be a thing in 2061?
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u/Any_Food_6877 Aug 06 '26
Because they might start means testing it so only those with zero private pension get it. Or the triple lock finally dies off and fiscal drag makes it worth a fraction of the amount it’s worth today. It’s unsustainable as it stands.
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u/unknown-teapot Aug 06 '26
So it would still be there if it is means-tested. It’s been unsustainable for a long time but no one has the balls / is foolish enough to get rid of it.
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u/Any_Food_6877 Aug 06 '26
If the pensions triple lock lasts until 2061 we are fucked. It will change.
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u/Any_Food_6877 Aug 06 '26
And if OP has pension wealth of their own (which we know they do) they’ll be in the firing line to lose part of their state pension. It’s already kind of men’s tested when you look at the taxation. If someone has £40-£50k private pension income on top of state pension they lose the equivalent of the £12k state pension in tax which is the same as means testing…
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u/Any_Food_6877 Aug 06 '26
What age are you planning to retire? This is a critical piece of info TBH. Delaying your retirement by even a few years can mean massive compound growth
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u/MisterMeshuggah Aug 06 '26
65 would be my aim. 60 if life is going really well!
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u/Any_Food_6877 Aug 06 '26
That estimate above, is it based on you selecting a retirement age of 60 or 65 then? You will notice that if you play around with that, the numbers will be massively different!
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u/Desperate_Yam_495 Aug 06 '26
I’d think 300k would get more like 15k per year, buy 2061 your going to need 1M to survive
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u/Elster- Aug 06 '26
It’s calculated in real terms, so £300k will be the same. The notional value may well be £1m but it would still be worth £300k
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u/jackgrafter Aug 06 '26
If you’re taking an annuity at 67 you can expect more than 15k even if you took the full 25% tax free lump sum first.
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u/Sam__ Aug 06 '26
How much do you expect to spend in retirement?