Always borrow money from a pessimist - they don't expect it back!

Anything Phil (Hammond) can do, I can do better (ish).

Having just finished listening to the Government's Budget from 'spreadsheet Phil', I hoped this rubbish joke would be entirely in keeping. Why crack a joke about borrowing? Because there are some very big numbers in this latest Budget - the Government is now only borrowing £47bn this year apparently. So, I thought I would share some big numbers in relation to pensions, following some very well-received 'lunch and learn' sessions recently held on the subject.

First, here are some of my particular favourite big numbers:

The '99 - everybody loves a Mr Whippy 99, with a generic flaky, jaunty-angled, chocolate addendum. Ignoring the possibility that the whippy nozzle might carry listeria, if not cleaned regularly, and that it's predominantly made from powder.
Germany 1-5 England - that famous fantastically big score when England beat Germany in 2001 at their place. It was one of the very last times I felt any sense of hope as an England football fan!
1999 - nobody rocked that number better than the late, great, tiny and oddly purple, musical genius, formerly known as Prince. He was totally unaware of the many IT experts expecting digital meltdown when 1999 partied into 2000. Consultants who felt compelled to charge considerable fees to ensure that the machines did not take over (like in Terminator).
49 million - allegedly, the number of bubbles in a bottle of prosecco. I love the stuff and pardon my French, it is now more favoured in my house than a touch of champers!

Back to pensions, here are some important numbers that should always be kept in mind:

£1m lifetime allowance - Hotly tipped by former pensions minister Steve Webb, as a target for another reduction in this Budget. It will actually rise to £1,030,000 from April 2018, so maybe there's a little more wriggle room for employees who are in retirement planning mode.
£40,000 standard annual allowance - Also hotly tipped for attack by Steve, but undamaged in the Budget. Don't forget the tapering of the standard annual allowance for higher earners, and the facility to bring forward unused reliefs ('carry forward'). It's more pressing to communicate both of these concepts effectively as bonus season and end of year beckons. A workplace pension contribution could be what tips an employee's balance to a significant change in tax situation. Do your high-earning top brass hugely appreciate educational support on this subject? 100% yes. Expert navigation is required through this taxation minefield.
15% target contribution - Not just my view, but one backed up in many government reports and research papers. This is the mid-teens number we should all be targeting, in terms of total (employer and employee) annual pension contributions as a percentage of salary. Government support, by way of personal marginal taxation relief, makes an employee's own commitment much more palatable - even more so if an employer makes a decent contribution as well.
£4,000 money purchase annual allowance - This comes into effect if an employee has already started to take income from a defined contribution (DC) pension pot, and wants to continue saving into a registered pension scheme. This reduced annual allowance can seriously curtail how much employees can pay into their pension, even if they are still earning enough for combined employee and employer contributions greater than this sum. This tripwire is little known and, little understood, which is genuinely evident in almost every pensions-focused employee financial wellbeing session I run.
£400,000 pension plan value - The size of pot that employees may need if they want to hit the ABI's (Association of British Insurers) recently researched average, aspirational income in retirement. (This figure assumes that an employee gets around £8,000 per annum from the state pension once they reach age 66/67.)

It is absolutely true that employees still don't fully understand their pensions, and are at risk of being off the pace, in terms of either contribution levels or taxation issues. I believe this lack of knowledge, and the re-balance of education, is best addressed in the workplace. And to finish, you have the pleasure of my very average closing workshop joke: 'hope is not a strategy, and denial is not a river in Egypt'.

James Biggs is head of financial being at Lorica.

This article was provided by Lorica.