Different types of pension saving: which works for you?

Helping you find your pension planner 'tribe'

9 minutes

When it comes to retirement planning and saving into your pension pot, it’s a case of different strokes for different folks.

We’ve looked at the behaviour of UK retirement savers and discovered four distinct ‘tribes’ – so which do you belong to? Here are the plans of four types of pension savers and how their plans have worked for them.

  • Could your career trajectory prevent you from realising your pension plan?
  • Should you keep looking for options or stay where you’re secure?
  • How to boost your retirement savings and switch tribes

Which pension planner tribe are you in?

The ‘busy stickers’: developing their careers and time poor

Becky Jennings, 29, and her partner Ben Phillips, 32, are both professionals, have just bought their first home and are thinking about a family. But not quite yet – so where does pension planning come in?

‘Life’s pretty hectic – I work as a legal executive while Ben’s higher up the legal tree with a well-known firm,’ says Becky. ‘We bought our first home a year ago, which used up all our savings. I’m going to have to work a few more years before Ben’s salary will be enough for us to start thinking about starting a family without my income.

‘As we’re both from legal backgrounds, we did all the sensible things when we bought the house – including taking out life insurance. As we’re both young, that wasn’t expensive. We also made sure Ben, who is the bigger earner, had plenty of cover for critical illness.

‘While Ben has got quite a generous company pension scheme, mine is the minimum contribution under auto-enrolment: 5% of my qualifying earnings goes into my pension. Next year that goes up to 8%, which is a bit more like it but probably not enough long term. We know we’re probably going to have to put more aside in the future, but that seems a long way off at the moment.’

The ‘able analysers’: always looking for the best options

Monica Tucker is 66 and widowed. She retired from her full-time job as a pharmacist’s assistant several years ago but still ‘keeps her hand in’, as she describes it, working at a local care home several afternoons a week.

‘I just missed out on the new State Pension, so I only get £125 a week, rather than the £164 I would have received,’ says Monica, ‘but fortunately I qualify for half of my late husband’s company pension and own my home, so I’m fairly comfortable. The money I earn doesn't add up to much as it’s taxed, but I love working there. I use it as my holiday fund each year – usually somewhere nice and warm for a few weeks!

‘I inherited half of my mother’s estate when she passed away two years ago and discovered a new hobby: investing. I’ve put £240,000 into ISAs and unit trusts, and I’m enjoying watching that grow – it’s something I can pass on to my two children and (currently) three grandchildren. I spent a long time working out the best way to invest it, and eventually took professional advice that confirmed what I thought anyway!

‘My main concerns now are minimising Inheritance Tax payments on my estate while making sure I have enough to pay for care should I ever need it. I read the financial section in my paper every Saturday, so I think I’m up to speed on what I need to do, and I’ve invested several pounds a month in an online retirement planner which tells me how much I can afford to spend and to gift to my children in the years ahead.

‘It all keeps the brain ticking over!’

The ‘comfort seekers’: looking for reassurance and a quality retirement

John Ives and his partner Dom Taylor are in a civil partnership, both are in their early fifties and have busy careers, own their own home and enjoy two extended holidays each year.

‘We live a fairly comfortable lifestyle, and not having children means our priorities are different from some couples,’ says John.

‘We have a very helpful financial advisor who sorted out our pensions for us and made sure that as much as possible will go to the other person on our death. I’m self-employed running a small retail operation, so our advisor set me up with a series of ISAs – which will pass directly to Dom. He has a company pension, half of which will pass to me. We’re also investing in an ISA for him, again on advice from our FA.

‘Retirement is (hopefully!) about 10 years away, and we can take more extended breaks, although I may keep my business going a little longer if I can find a manager I can trust. Our advisor gives us an annual report on how much we will be able to draw in retirement – and that’s incredibly reassuring. One less thing to worry about!’

The ‘secure switchers’: financially comfortable and planning for the future

Abby Lewis, 36, and husband Matt, 42, have two children and their priority is making sure their kids get off to the best possible start.

‘They’re just 10 and 8, but we’re already putting plans in place so that they can afford to go to university and buy their first home,’ says Abby. ‘We both had a bit of help from our parents and know how important it is to get a ‘leg up’ – I’ve got friends still living in rented homes and looking at paying student loans for years to come.

‘I work part time in marketing, and one of my clients is in finance – that’s given me a lot of insight as to what’s out there.

‘We’ve both got reasonable company pensions, and that together with our State Pension will hopefully get us through retirement. Our mortgage gets paid off when Matt reaches 59, and we’ll have time to put more aside then if we’re able – and I should be back working full time in a few years.

‘For the kids, we’ve invested in Junior ISAs. These started as money the government gave us through the Child Trust Fund – the interest rate wasn’t great, so we’ve switched to get a better return. You can add up to £4,260 a year tax-free to each child’s fund – we certainly don’t add that much, but we put in what we can, and our parents do too. It has certainly got the kids interested in finance, and each of them has been adding to their fund with some of their birthday and Christmas money, bless them!’

What type of saver are you? And what type of saver would you like to be? It may feel like you don’t have the funds or the time to start putting money towards your future, but as John and Monica prove, a conversation with a professional advisor can help you find the right saving option. If you’re not ready to talk to an advisor, there are plenty of tools out there, such as our pension calculator, that could help you make a start.