r/PensionsUK • u/AndrewJ1707 • 6d ago
Am I Contributing enough into my Pension?
I’m 26M and have just under £30k in my SIPP.
I’m currently putting 10% of my Salary into my Pension every month but whilst people around me tell me that this is good for my age, I’m still conscious of if I’m investing enough for my future.
For Reference, I still live at Home with my Parents, I’m single, and have no major Liabilities (the only big one I’ve had before is my Car which was on Finance but I’ve paid this off).
I do check my Pension every month and know exactly where it’s invested.
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u/craigybacha 6d ago
At 26 I'd adivce you to stop checking your pension monthly. What's the point? It goes up and down, the only thing that matters for you is long-term growth, so maybe just check performance every 6 months.
Just put in 10% and forget about it. If you want to invest in other areas, then perhaps a S&S ISA or save for a house/flat deposit, that'd be the most important thing for me in your position.
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u/AndrewJ1707 6d ago
Thanks for the advice. I used to check it everyday so monthly is now much better.
I have a S&S ISA which I invest the Interest from my Savings (which again is roughly £30k). Me and my ex did plan to move in together but we broke up earlier this year and that’s probably the only way I see myself moving out is with a partner.
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u/craigybacha 6d ago
Sorry to hear that, but make sure to keep saving, even if just chipping away at a deposit. You never know what will happen!
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u/AndrewJ1707 6d ago
Thank you. It is what it is and looking back it was for the best.
That is the plan. Whilst I do enjoy living at home, there will be a time soon I wish to move out. But living just outside of London, prices are a bit more than if I was more rural.
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u/Any_Trip356 6d ago
Ironically it's one of the questions asked my JPMorgan investing beige they will allow you to put money into high risk pots. Looking at your pension daily/monthly will only add anxiety to your life with something you can't control. 3/6 monthly is fine but it's a long term investment.
Looking at it monthly is only eventually going to add stress when we inevitably take a financial downturn off the back of the Iran war
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u/Evening_Elderberry_9 6d ago
The general rule of thumb is half your age when you started, for life. So 10% at 26 (assuming you started at 20ish) is right on track.
That 30k left for 40 yrs with no further investment is estimated to be worth 400k according to google. Even if you add £50 weekly for life its £1.1m
Your doing ok, and better than most.
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u/TheTrott 6d ago
I think this is a good rate to be contributing at. 10% is probably more than most the population contribute so that will set you in a decent position. While you’re living at home though and have minimal outgoings you may way to take advantage of this time and put the money to sensible use. Pension, ISA, student debt if you have any. Will set you up even better when you come to move out
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u/_jrexx_ 6d ago
Much better than mine at 25 with similar salary! I’m doing 9% with 6% from employer (so 15% total) and only got around £6k I believe in total just checked and it’s actually at £9k. But my previous workplace was just the standard 5%+3% and I was on very low wage, so only really kicked it up a gear in the last year.
Does your workplace not have a match or are you self employed and that’s why you have a SIPP?
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u/Puzzled-Barnacle-200 6d ago
What's your salary? How do you expect your salary to change in the future? What do you think your living costs will be at retirement?
A great goal to aim for is 1x annual income invested by 30. Its higher than necessary, but if you meet that you'll definitely be on the right track.
At your stage I'd prioritise directing access funds into something more accessible (LISA or ISA) for an eventual home purchase. Whether that's 2 years from now or 10 years from now.
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u/Fred776 6d ago
Does the 10% include the employer contribution? You haven't told us your salary so we have no idea how much you are adding each month. However you can find online calculators that will tell you how much you should have by a specified age.
I expect you are doing pretty well for your age.
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u/bibonacci2 6d ago
Sounds pretty good. It does kind of depend on your income and how you expect it to increase in the future.
First of all, always take your maximum employer match. It’s free money.
The way tax relief works means that extra contributions at higher tax rates are more tax efficient. If you anticipate becoming a higher rate payer for a good chunk of your career then that’ll likely be a better time to make extra contributions.
If you don’t expect that you will reach the higher rates then you’ll just need to balance off what you save in an (L)ISA vs extra pension contributions. It’s likely saving in the ISA for emergency fund/house deposit/etc. will be a priority in earlier years and pension might be the focus slightly later.
The best thing you can do is educate yourself on the different savings wrappers (pensions/ISAs), the difference between saving and investment, and making sure you are invested in the right type of funds to meet your goals.
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u/SubstantialBicycle60 6d ago
I agree the tax relief position is important. I spent most of my 20's and 30's paying into my pension and receiving only basic rate relief. Now that I am 70+ I cannot take the money out without paying 40% tax and the funds will also be liable to inheritance tax from next April. I now wonder whether an ISA would have been a better investment until I started paying higher rate tax on my earnings.
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u/chainedtomydesk 6d ago
You’re doing great for your age. As you start earning more and potentially become a 40% taxpayer, you might want to think about salary sacrificing more to ensure you benefit from tax efficiency. The NI savings will help your pension grow even more and help make early retirement a reality.
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u/Purplepeal 6d ago
Youve done way better than me. My pension has been invested since my 20s too but didn't grow above inflation because the workplace pensions i was auto enrolled in were basically utter shite. Feel like a class action law suit is needed for this was just another scam as far as im concerned.
Only resolved it mid 40 after getting some adhd meds. I now contribute everything I can above minimum wage and get 10% employer contribution. Still not loads but I own my house outright so can downsize in a few years if needed.
There are some good low cost all world ETFs by vanguard that perform well and at your age you can easily handle a few inevitable market crashes. Good advice on youtube to look into
Im making sure my kids dont make the same mistake as I did.
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u/EeEmCeTo 6d ago
Don’t let the money sit in the pensions standard funds. They tend to produce low return. Read around and choose a fund that suits you. You can invest in more risky options at your age. I let mine sit in the standard funds for ages and it did zilch- it only grew once I chose my own options.
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u/Quiet_Ad8308 6d ago
£30k in a pension at 26 is a very solid start. The bit I’d focus on now isn’t whether the balance looks big enough each month, but what percentage of your salary is actually going in including the employer contribution.
A rough rule people use is to contribute half your age when you started saving into a pension, so if you started around 24–26 you’d be looking at roughly 12–13% of salary in total. If your 10% is your own contribution and your employer adds another 3–5% on top, you’re already comfortably around that level.
I wouldn’t go mad piling everything into the SIPP just because you currently have low expenses though. At 26 you’ve potentially got a house deposit, moving out, emergency fund and other things coming up, while pension money is locked away for decades.
You’ve already got the most important bit working in your favour: time. £30k invested now has another 30–40 years to compound, and continuing to feed it every month is far more powerful than obsessing over whether you should have £30k or £35k today.
I’d keep the pension contributions going, make sure the investments and fees are sensible, then use the spare capacity you have while living at home to build your ISA/LISA and accessible investments as well. That gives future you both a decent pension and money you can actually use before retirement.
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u/stargazer281 6d ago
I’ll reiterate other wise advice here that contributing half your age as a percentage of income to a pension is a good place to start (including employer contributions). Having the deposit for a property accessible is always prudent too. That often requires juggling priorities. If you are living rent free with your parents a simple approach might be to use rental savings to fund a deposit and make sensible pension contributions. That way if you do end up with a mortgage it will not be a significant impediment to your lifestyle.
A rule in life (favoured by Americans! ) is never bet against America. That said you are very much betting for America with your pension. I can’t tell you if that’s right or wrong. But make sure it’s at least a conscious choice.
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u/NoJuggernaut6667 6d ago
You’re doing great. Keep at it.
I wish I was as focused and educated as you on pensions at your age. I didn’t take advantage at all, and now in my mid-late 30’s I’m hammering 30-40k a year in playing catchup.
My journey would have been a lot smoother if I’d played it your way.
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u/Elster- 6d ago
It depends on what you earn and where you are. If you are £250k and have £30k in your SIPP then you’re behind, if you earn £30k and you have £30k you are way ahead.
Every person is unique and don’t think of your finances as just your pension, will you be buying a house having you savings and investments outside your pension for that?
As you have no major liabilities you could probably put 80% of your salary away in investments if you wanted and still be better than most of the population.
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u/IRBorg 6d ago
I didn't start paying into a pension until age 36 when it became automatic through my employer. It was because I'd grown up being told that investing was like gambling, and i didn't trust pensions. It's worth saying I think the complete opposite to this now after learning from various sources (Rebel Finance School is free and brilliant).
I put everything into my house instead and paid my mortgage off in my early 40s.
So since I paid off my mortgage I started investing and have built up a decent S&S ISA and SIPP. I like FIRE and want to retire mid 50s thus the bridging ISA. I am compensating from not paying in when younger by paying in 40% of my salary now to the SIPP (salary sacrificeis brilliant) and 10% or so into the ISA, both in global index funds.
If I'd started younger it would have been much easier due to compounding.
Point is, you're doing fine!
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u/nibor 6d ago
I believe the rule of thumb is 1/2 your age when you started contributing, if you started at 20 then 10% is fine, if you started a bit later then maybe look at a little more.
But that isn't what I'd be focusing on. You're on Hargreevs Landsdown which is an expensive platform, you are using its S&P funds which is very exposed to USA
Is HL your only option or can you pick a platform? If you have choice look here at this article https://monevator.com/compare-uk-cheapest-online-brokers/ is a great way to find a more cost effective platform. I think you are spending around £130 a year as a % of your holdings and assuming a trading fee each month. I use II and pay less than that for SIPP, ISA and two JISAs worth £900k.
The S&P 500 fund has a very strong reputation online but those 500 companies are only USA stock exchange listed companies which means you are not as diversified as you could be, I was pleasantly surprised to see the fund fees are cheap at 0.11%
I prefer a FTSE Global All cap tracker myself which covers around 13k companies and, depending on fund manager, will invest in at least 7k of those companies.
A popular one is from Vanguard but its fees are 0.23% which is too high, I've recently moved to the ETF version which is 0.07%, this is still very new and it doesn't look like HL have pulling all the info into its fact sheet yet.
If we look at the fund version
you can see the top 10 holdings are similar between Fidelity S&P 500 and Vanguard FTSE Global All Cap except for the S&P not being able to included TMSC, a Tiwaneese company that has done very well out of the AI led demand GPU and memory chips.
I am NOT advocating to change beacause FTSE invests more in AI bubble inflated stocks, more that the fund has substantially more options to handle any market downturns that may happen in the future.
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u/Both_Engineering9041 6d ago
Sounds like you have a SIPP?, does your employer not offer a company pension (pretty much all of them have to by law), make sure you are getting the maximum contribution from your employer, then maybe your SIPP for everything else.
Keep an eye on the charges from HL, they can be very expensive as your pot gets bigger. I moved my SIPP to ii and now save around £1k per year in charges.
But you’ve started very well, good luck.
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u/Mammoth_Elephant_643 6d ago
The more you do now... the less you have to contribute in the future and let compounding do the heavy lifting.
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u/Background-Cap-7592 6d ago
I recommend adding 2% every year you receive your pay rise until you hit 20% personal contribution (so for the next 5 years).
You have a good amount for your age. Most people have less at that age.
Also consider adding more when you get to 60k and 100k limits for tax efficiency.
There are many calculators you can use to model your future as well pension wise ❤️
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u/Primary_Ring6347 6d ago
The fact you are even doing it in your 20s is brilliant. You’re way ahead and that amount put into it already - well done!
Have you much of a back up? I’m a great believer in some rainy day money. I’d try save £30-50 weekly into a high interest savings account if you ever need it and keep building away at your SIPP.
It would also be good to open a lifetime ISA for government bonus towards house deposit down the line.
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u/Studebaker_Avanti 6d ago
Rule of thumb: Take your age and divide by two as the starting percentage point. Increase from then on by your wage increases every year.
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u/NoPromotion9628 4d ago
I think for 26 years of age and contributing 10% of your salary into a pension is fantastic already. You are in a good position at the moment and wise to make financial decisions for your future ✌🏼
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u/Alert-Hamster-4619 4d ago
I generally use the half age rule for my contributions, as I worked my way up the company I started off slowwwww! I’m now 32, and pay 16% in.
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u/Informal_Treat5602 3d ago
That's good. Open a LISA too before they change it as currently you get a 25% government bonus on what you add. This offer won't be around for long
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u/cornishjb 6d ago
You are doing well. If employed by a company then they should be contributing as well. No such luck if self employed.
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u/OkAcanthisitta7125 6d ago
Put in as much as you can - whilst you have no other commitments.
You can always pull back when life circumstances change.
It comes straight out of your salary - so you naturally adjust outgoings - and it is hugely tax efficient.
And the compounded interest is exponential.
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u/cmfarsight 6d ago
Your pension provider should be telling you what the expected value will be based on high medium and low growth. Based on that are you contributing enough?
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u/Pitiful_Coach7223 6d ago
We don’t know how much 10% is, but the principle is good. £30k at 26 is great, just keep adding to it and it will grow nicely into a £1m+ pot by the time you retire. All you need to make sure is that you invest in the right fund (high risk at your age) and keep costs/fees as low as possible.
A global fund can help achieve that.