In our Pension Diaries series, we speak to people of all ages in the UK to find out how much or how little they have saved for retirement and the realities of putting money aside for your future.
This week, we speak to Kirsty Ross, propositions director at People’s Partnership, a firm which focuses on workplace pensions.
Kirsty, 37, lives in Wilmslow, near Manchester, with her partner Andrew and their six-year-old daughter and three-year-old son.
She feels privileged as her career means she recognised the importance of putting money into a pension from an early age. However, she wants to bust the myth that pensions experts have all the answers as they have the same worries about having enough money for retirement as everybody else.
How did you first get into a career in pensions?
I grew up in Scotland and went to a very normal school. My two favourite subjects at school were maths and PE.
I felt that maths had more of a natural career progression so I studied that at Edinburgh University and that led to me becoming an actuary at Standard Life.
I have also kept up my interest in sports. I love mountain climbing, getting out into the wilderness and going for runs, walks and playing tennis. It is a good way to unwind after work.
Kirsty Ross loves mountain climbing and exploring the wildernessWhen did you first start investing in your own pension?
Before I joined the industry and started at Standard Life, I didn’t even know what a pension was. I was 21 when I started working there and one of the main products they sold was a pension.
Working in that environment, I benefitted from being surrounded by individuals who communicated to me the importance of starting to save into a pension early.
I began my pension at the age of 21 at Standard Life and then I moved to different pension companies so had quite a few workplace pensions.
How many pensions do you have and what is their estimated value?
I have worked at Standard Life, Aegon, Royal London and now People’s Partnership for the last two years. They were all defined contribution pensions.
I now only have two pensions as I have consolidated most of them. I have a pension with Royal London and my active pension with People’s Partnership. My estimated total pension pot is worth around £300,000 at the moment.
Do you have a target pension figure or age in mind for retirement?
I don’t have a specific pot figure or age in mind, because I enjoy sports and outdoor activities so much and want to keep that going in retirement.
This means there is a bit of a trade-off in wanting to be physically fit enough to be able to achieve those objectives and retire early enough to enjoy retirement. I also want to feel very confident that financially I will be able to afford that.
With that in mind, I have been thinking about the lifestyle I have now as a baseline, projecting forwards in terms of a costs perspective and thinking about the costs that can be removed from today’s lifestyle that I won’t have to worry about in retirement.
That is things like a mortgage, childcare costs and some of the more luxury things like gym membership.
Using online calculators and tools, I have been sketching it out and roughly, it looks like I should be able to get there by age 60.
Do you have any pension regrets?
While I understood the importance of pensions, I did not fully appreciate the significance of that employer-matching benefit – especially early on in your career.
I was privileged that I was doing the right thing by putting money into my pension so early on. I was putting in between five and 10 per cent as my personal contribution during my twenties.
But if I had contributed even one or two per cent of my salary more than I was, I would have been doubling my money for free and getting all the benefits of compounding and tax relief.
I am now contributing 20 per cent into my pension and my employer gives me another 14 per cent with maximum employer matching. It is quite a chunky contribution, but there is flexibility so if my lifestyle gets more expensive, I can reduce it.
The other thing I would have done differently, was how I dealt with pensions during maternity leave. With both my children, I opted out of pensions while I was on maternity from an affordability perspective.
I guess what I didn’t appreciate at the time is that I wasn’t just missing out on my own contributions, but also the employer contributions which would have been based on my salary before I went on maternity leave.
In hindsight, Kirsty wishes she had not stopped her pension contributions during maternity leaveWhat fears and anxieties do you have about retirement?
The biggest myth I want to bust is that pensions experts have all the answers – because we don’t. All the things that everyone worries about around pensions such as, “Can I afford to retire? What will happen with my money? Will I live too long and run out of money?” – These are all questions we worry about too.
The difference is that the benefit of working in the pensions industry is that you become more comfortable with that uncertainty and you can utilise tools like retirement calculators and annual planning to manage that anxiety.
There is so much uncertainty about the future, some of which is within my control and some of which isn’t. The things that are out of control are things like inflation and investment performance. I am invested in the default investment profile because I trust the experts who are looking after that money to do a better job than I could.
The things that are more in my control are the levers you can pull around what age you retire, working out how much income you are going to rely on in retirement and how much you can put in in contributions now.
My advice to people is: don’t bury your head in the sand – figure out what your baseline is and take action from there. It is never too late and you can always make a plan.
What are your dreams for retirement?
I want to be active as long as possible and I would love to tick off all the Munros in Scotland, which are mountains that are at least 3,000-feet high. There are 282 Munros in Scotland which will take a huge time commitment so I will have to wait until retirement.
I would also love to travel the world and appreciate life and spend time with my children and be able to support them financially.
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