What age should you start a pension??

24

Comments

  • MrMicawber_2
    MrMicawber_2 Posts: 302 Forumite
    Lokolo - Yup, obvious and actually to me as well but perhaps not to people who haven't read around the subject a bit. The devil's in the detail.

    Ringo - yes it does. If you start at 25 you put say 15% of your annual salary into your pension each year until you hit 65. So as your salary goes up so does the amount of your contribution.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Holiday Haggler
    Shame my firm only matches 5% contributions.. ho hum, i'm 28 and i've been putting 7.5 - 5% of my salary away for the last 5 years, should be alright.

    My dad's gone nuts and started putting 2k a month into his, lol
  • dunstonh
    dunstonh Posts: 116,318 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    ringo_24601 wrote: »
    Shame my firm only matches 5% contributions.. ho hum, i'm 28 and i've been putting 7.5 - 5% of my salary away for the last 5 years, should be alright.

    My dad's gone nuts and started putting 2k a month into his, lol

    Thats excellent. 12.5% into a pension from the age of 23 is going to set you up nicely. Plus, as you started early, you are not going to miss the money as you are just so used to it.

    If someone came to you now and said you need to put in 7.5% you would probably find it harder to find that money. Indeed, it would be around 9% now if starting at 28 to make up for the years that you would have missed.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Lokolo
    Lokolo Posts: 20,861 Forumite
    First Post First Anniversary
    MrMicawber wrote: »
    Lokolo - Yup, obvious and actually to me as well but perhaps not to people who haven't read around the subject a bit. The devil's in the detail.

    To be fair thats the only thing I know about pensions....!
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    MrMicawber wrote: »
    In regard to the debate above between dunstonh and Ed, I fall into the pension first camp. You might be tempted to spend ISA's but with pensions you just aren't allowed to.

    The fact that you cannot remove money from a pension is a risk not an advantage.The Government can do anything it likes to change the rules, possibly so they are a big problem for you, but you can do nothing because your money is trapped.

    There are some gains for some people from using pension wrappers but the OP's case does not appear to be one of them.
    Yes with ISA's you have capital but you could end up elderly with all your capital eroded away and no income left - it could very easily happen.
    There are many ways for capital to be eroded apart from spending it and they all apply to pensions as well as ISAs.

    Here's the MSE Pensions vs ISAs debate thread:

    http://forums.moneysavingexpert.com/showthread.html?t=375217

    I like this poster's basic approach as outlined on that thread:

    http://forums.moneysavingexpert.com/showpost.html?p=4311783&postcount=17
    Trying to keep it simple...;)
  • MrMicawber_2
    MrMicawber_2 Posts: 302 Forumite
    EdInvestor - I'm not going to get into a WW3 string of posts with you on this. There are pro's and con's and we take a different overall view. But it is a broad view and there are many variables to take into account. (e.g. you could invest and save in ISA's, then when you hit retirement age take out an annuity with some of the capital and keep the rest in the ISA's).

    The government can also do anything it likes with ISA's as well despite the fact that they say they are here to stay. Also any UK gov't would be bonkers to take away pension advantages given that 80% of the population have inadequate provision. We could no doubt debate that one for the rest of our lives.

    Just about all investment and savings are at the immediate discretion of the gov't as we know all too well. (Just look at what suddenly happened to Investment Bonds as a by product of the CGT changes in the last budget - and I read your tussle with dunstonh on that one)

    Broadly speaking then, my opinion, is that despite all the pro's and con's, for most people, having a pension is the best thing to do regarding a retirement income.

    I've done quite a few serious calculations on eroding capital from ISA's because this whole area is one I've thought long and hard about for myself. Using realistic figures you need to have a massive capital cushion before you can be sure that capital in an ISA will not be eroded [because you need to take it as income] before you die.

    Don't get me wrong, ISA's are fantastic - I wish I had more. But pensions, again in my opinion, are the way to go first for most people.

    So - happy to have a debate, but not happy to have an acrimonious war.
  • EdInvestor
    EdInvestor Posts: 15,749 Forumite
    Mr Micawber
    MrMicawber wrote: »
    So - happy to have a debate, but not happy to have an acrimonious war.


    It seems you are seeing acrimony where none exists - unless you feel that anyone who takes a view different from yours is a proponent of WW3, of course .:)
    Trying to keep it simple...;)
  • Just_landed
    Just_landed Posts: 608 Forumite
    First Anniversary Combo Breaker
    The government can also do anything it likes with ISA's as well despite the fact that they say they are here to stay. Also any UK gov't would be bonkers to take away pension advantages given that 80% of the population have inadequate provision. We could no doubt debate that one for the rest of our lives.

    Bonkers is possibly a good way of descibing it, where else could Prudence Rob us of five billion a year. :eek:
  • MrMicawber_2
    MrMicawber_2 Posts: 302 Forumite
    Edinvestor - I have read many of your posts where you and duntstonh do battle and I don't want that - it seems to get rather heated, hence the acrimonious bit. I am more than happy for people to disagree with me, of course. There is not usually one entirely right answer and who am I to say I have the right one. I do disagree with you, quite strongly, on the broad pension v ISA subject just as you disagree with me. What I mean by WW3 in the context of our last couple of threads is the possibility of innumerable posts with no conclusion.
  • jamesd
    jamesd Posts: 26,103 Forumite
    Name Dropper First Post First Anniversary
    ringo_24601 wrote: »
    My dad's gone nuts and started putting 2k a month into his, lol
    Good move. I intend to do the same now and at other times when prices are cheap, then back off when they are expensive.
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