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  • FIRST POST
    • potterspury
    • By potterspury 21st Feb 17, 12:25 PM
    • 23Posts
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    potterspury
    Work based pension has ended with job, shall I continue with them when self employed?
    • #1
    • 21st Feb 17, 12:25 PM
    Work based pension has ended with job, shall I continue with them when self employed? 21st Feb 17 at 12:25 PM
    I was with Aviva work based pension scheme and my company was matching the 3% I was paying. I called Aviva and they said I could continue it now that I am self employed and the government would match what i pay by 20%. This is much less than the 100% match that my company did. Is it worth doing? I
Page 1
    • atush
    • By atush 21st Feb 17, 12:41 PM
    • 15,811 Posts
    • 9,582 Thanks
    atush
    • #2
    • 21st Feb 17, 12:41 PM
    • #2
    • 21st Feb 17, 12:41 PM
    It can be.

    Depending on your age, how you you intend to be SE, and if you have an emergency cash fund and any other savings and investments.

    If you have a cash fund, and expect to be SE sjhort term, i'd look into S&S isas.
    • molerat
    • By molerat 21st Feb 17, 12:43 PM
    • 16,195 Posts
    • 10,335 Thanks
    molerat
    • #3
    • 21st Feb 17, 12:43 PM
    • #3
    • 21st Feb 17, 12:43 PM
    The gov will add 20% to any pension you pay into in the same way they did when employed, it probably is worth paying into a pension. The question is whether this particular scheme is the one to be putting the money into.
    www.helpforheroes.org.uk/donations.html
    • xylophone
    • By xylophone 21st Feb 17, 12:46 PM
    • 21,274 Posts
    • 12,215 Thanks
    xylophone
    • #4
    • 21st Feb 17, 12:46 PM
    • #4
    • 21st Feb 17, 12:46 PM
    When you were employed, your company paid 3%, you contributed 2.4% (net) and the government paid 0.6% resulting in an annual 6% of earnings in your pension.

    Is it worth doing?
    It is now up to you to make pension provision- if you don't, you'll be trying to live on the state pension in old age. The government will give you tax relief on your contributions.

    https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief
    • marlot
    • By marlot 21st Feb 17, 1:29 PM
    • 2,977 Posts
    • 2,132 Thanks
    marlot
    • #5
    • 21st Feb 17, 1:29 PM
    • #5
    • 21st Feb 17, 1:29 PM
    I was with Aviva work based pension scheme and my company was matching the 3% I was paying. I called Aviva and they said I could continue it now that I am self employed and the government would match what i pay by 20%. This is much less than the 100% match that my company did. Is it worth doing? I
    Originally posted by potterspury
    What will you live on in your old age if you don't?

    It doesn't have to be a pension, but getting into a savings habit is essential!
    • CapricornLass
    • By CapricornLass 27th Feb 17, 7:47 PM
    • 55 Posts
    • 187 Thanks
    CapricornLass
    • #6
    • 27th Feb 17, 7:47 PM
    • #6
    • 27th Feb 17, 7:47 PM
    one thing to consider is that if you go bankrupt, then your creditors cant touch your pension. I appreciate that S&S ISAs and other investments could bring more, but they don't have the same level of protection.
    Sealed Pot Challenge no 265.
    • potterspury
    • By potterspury 27th Feb 17, 9:21 PM
    • 23 Posts
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    potterspury
    • #7
    • 27th Feb 17, 9:21 PM
    • #7
    • 27th Feb 17, 9:21 PM
    It can be.

    Depending on your age, how you you intend to be SE, and if you have an emergency cash fund and any other savings and investments.

    If you have a cash fund, and expect to be SE sjhort term, i'd look into S&S isas.
    Originally posted by atush
    43 and spent many years abroad so my state pension contributions are also a bit low.

    Maybe just go with Aviva as they have all my details. i don't understand pension schemes to be honest.
    • AnotherJoe
    • By AnotherJoe 27th Feb 17, 11:02 PM
    • 6,295 Posts
    • 6,660 Thanks
    AnotherJoe
    • #8
    • 27th Feb 17, 11:02 PM
    • #8
    • 27th Feb 17, 11:02 PM
    I was with Aviva work based pension scheme and my company was matching the 3% I was paying. I called Aviva and they said I could continue it now that I am self employed and the government would match what i pay by 20%. This is much less than the 100% match that my company did. Is it worth doing? I
    Originally posted by potterspury
    It wasnt enough before so not doing it at all is certainly not a good plan.

    Are you happy just to be on state pension when you retire? Assuming not, do something about it, such a saving substantially more than 6% which was not enough by a long way to start with.
    • AnotherJoe
    • By AnotherJoe 27th Feb 17, 11:04 PM
    • 6,295 Posts
    • 6,660 Thanks
    AnotherJoe
    • #9
    • 27th Feb 17, 11:04 PM
    • #9
    • 27th Feb 17, 11:04 PM
    I appreciate that S&S ISAs and other investments could bring more, but they don't have the same level of protection.
    Originally posted by CapricornLass
    By what magic could they do that, since you can hold exactly the same investments in a pension as in " S&S ISAs and other investments" which is in any case a nonsensical statement.
    • ex-pat scot
    • By ex-pat scot 28th Feb 17, 9:23 AM
    • 173 Posts
    • 194 Thanks
    ex-pat scot
    43 and spent many years abroad so my state pension contributions are also a bit low.

    Maybe just go with Aviva as they have all my details. i don't understand pension schemes to be honest.
    Originally posted by potterspury

    The Aviva scheme is quite decent (I used to be in it too).
    You will probably find that there are cheaper alternatives.


    A few thoughts:


    1. you are 43. You really need to wake up now and sort things out. It's never too late, but delaying now will make a huge difference to your wealth in later years.


    2. you have been abroad for many years. I hope you have been making some sort of pension saving there. You will not (normally) have been accumulating state pension entitlement, so might struggle to accumulate the full 35 years by the time you get to SPA at 68


    3. your previous contributions were not terribly good. 3% matched was OK, but Aviva used to match up to a much higher level. You've missed out on quite a bit of free money from them.


    4. assuming you have modest / little current pension pot, then you need to get real as to how much you should be contributing.
    You need to reset your thinking on what is OK. Think 20% overall (split between you and company contributions, if you get them).
    Whilst there is no absolute rule, a good starting point is that you should be thinking about the contribution percentage as half of your age. At 43, that means you should be thinking about your starting level of contributions being 21.5%


    5. you state you have little understanding of pensions.
    Yet you worked in Aviva, one of the major pensions providers (OK you might have worked in the GI sector).
    You really really need to take a bit more of a grown up attitude to this.
    It is not enough to say "I don't understand pension schemes".
    They are not tricky beasts to understand the basics of.
    You save money.
    You ensure it is invested.
    You retire.
    You use the money to augment your state pension in retirement.
    The more you save, the more you will have for retirement, and the earlier you might be able to retire.
    The earlier you save, the more investment return you will achieve.
    You get tax relief on your contributions, meaning an immediate boost to your retirement pot.
    You often get employer contributions, which are a form of additional "salary". If you do not maximise these, you are forgoing salary.


    You can run calculations, which can get complicated, but there are many guides and calculators online.
    these will tell you what sort of retirement fund you would need to fund a set level of retirement income.
    They will tell you how much you need to save, in order to achieve that fund at retirement.


    You can then look at how much you need to save, and compare against what you are doing now.


    That's it. Nothing more.


    I would expect that a person having worked in financial services would be able to navigate these steps with ease.


    There are lots of helpful people on here who can take you through each step, and guide you to the extent that you require.


    Good luck.
    • potterspury
    • By potterspury 4th Mar 17, 9:14 AM
    • 23 Posts
    • 0 Thanks
    potterspury
    Never worked for Aviva or any financial institution. Did I say that? My only pension was the work based one(government introduced one/ we all in one on the TV last year) for two years where I paid 3% of my monthly salary into it and my company matched it so that equals 6% of my monthly salary. I have now been laid off so Aviva sent me a package where I can continue with them now that I am self employed. The self employed programme means that it's not as good as if I was working for someone because the government will pay in 20% of whatever I pay.

    20% compared to 100% is a lot less, so my question is should I continue with Aviva while I am self employed, is this an ok insurance scheme?

    On another note, because I was abroad for 11 years I only have I think 16 years NI paid in and I am now 43. They estimate I will have 39 years when I retire (according to the HMRC site). I can backpay 4 years at 650 a year, should I do this?
    Last edited by potterspury; 04-03-2017 at 9:17 AM.
  • jamesd
    It's rubbish as an insurance scheme. It has no insurance at all. It's OK as a pension scheme.

    No need for you to buy past years for the state pension if you will work until state pension age minus four years but if you want to retire sooner the years you can buy now will probably be cheaper than buying them later. It's also possible that the number of years needed could go up again.

    Whether you should pay into a pension depends on whether you want to live on only the state pension and whether you want to retire earlier than state pension age. At about 8,000 a year the state pension is a bit low for most of us and state pension age is likely to be higher than 68 by the time you reach it.
    Last edited by jamesd; 04-03-2017 at 10:23 AM.
    • potterspury
    • By potterspury 4th Mar 17, 4:29 PM
    • 23 Posts
    • 0 Thanks
    potterspury
    Well I want to have some sort of pension scheme (not insurance scheme) made a mistake typing that. Is the Aviva one where the government pay in another 20% as good as any? I am now self employed.

    Still considering paying back those 4 years of missed NI contributions. And now that i am going self employed my pension NI contributions will be lower, won't they? Is it much worse to be self employed compared to PAYE for a pension?
    • xylophone
    • By xylophone 4th Mar 17, 5:38 PM
    • 21,274 Posts
    • 12,215 Thanks
    xylophone
    http://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed

    https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions

    You could continue to contribute to the Aviva Pension.

    http://www.litrg.org.uk/tax-guides/self-employment/pensions-and-self-employment

    You can pay in up to your net relevant earnings (subject to Annual Allowance) and the pension provider will claim basic rate tax relief - should you become a higher rate tax payer you will need to contact HMRC.

    https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

    http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator
    • AlanP
    • By AlanP 4th Mar 17, 8:12 PM
    • 734 Posts
    • 495 Thanks
    AlanP
    My only pension was the work based one(government introduced one/ we all in one on the TV last year) for two years where I paid 3% of my monthly salary into it and my company matched it so that equals 6% of my monthly salary. I have now been laid off so Aviva sent me a package where I can continue with them now that I am self employed. The self employed programme means that it's not as good as if I was working for someone because the government will pay in 20% of whatever I pay.

    20% compared to 100% is a lot less, so my question is should I continue with Aviva while I am self employed, is this an ok insurance scheme?
    Originally posted by potterspury
    I can see what you are thinking and why but you are looking at this the wrong way.

    When you were employed 3% of your Salary before tax was put in to the AVIVA pension for you and your employer added a matching 3%.

    As your 3% was before tax you didn't pay your 20% tax on it so it is no different to what will happen now you are self employed - you pay in to a pension and the government gives you the 20% tax relief straight into your pension pot.

    What you are missing out on now is the 3% employer match.
    • potterspury
    • By potterspury 5th Mar 17, 11:10 PM
    • 23 Posts
    • 0 Thanks
    potterspury
    I can see what you are thinking and why but you are looking at this the wrong way.

    When you were employed 3% of your Salary before tax was put in to the AVIVA pension for you and your employer added a matching 3%.

    As your 3% was before tax you didn't pay your 20% tax on it so it is no different to what will happen now you are self employed - you pay in to a pension and the government gives you the 20% tax relief straight into your pension pot.

    What you are missing out on now is the 3% employer match.
    Originally posted by AlanP
    so if you dont pay any tax or much tax that year then all aviva are doing is looking after your money not adding anything, right?
    • xylophone
    • By xylophone 6th Mar 17, 9:40 AM
    • 21,274 Posts
    • 12,215 Thanks
    xylophone
    so if you dont pay any tax or much tax that year then all aviva are doing is looking after your money not adding anything, right?
    Don't think of Aviva "adding anything" but rather of Aviva claiming tax relief.

    If there are no "relevant earnings", then up to 2880 can be paid into a personal pension and the provider (Aviva in this case) will claim up to 720 in tax relief and it will be added to the pot. Even a babe in arms could have a personal pension opened for him and tax relief claimed in this way.

    If a person's "relevant earnings" were 11,000 this year and that was his only income, then he would not have paid any income tax.

    Nevertheless, he could have paid up to 8800 into his personal pension and the provider would claim up to 2,200 in tax relief and add it to his pot.

    If his relevant earnings were 15,000, he could have paid up to 12000 into his pension and the provider would claim 3000 in tax relief - this despite the fact that he would only have paid income tax on the level of his earnings that were over 11,000.

    http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest
    • potterspury
    • By potterspury 16th Mar 17, 8:58 AM
    • 23 Posts
    • 0 Thanks
    potterspury
    basically what i am saying is, is the Aviva one as good as any? I want to get some sort of pension.
    • xylophone
    • By xylophone 16th Mar 17, 11:08 AM
    • 21,274 Posts
    • 12,215 Thanks
    xylophone
    Why not just continue with Aviva while you explore other options?

    You could consult an IFA.

    https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser
    • potterspury
    • By potterspury 18th Mar 17, 12:55 AM
    • 23 Posts
    • 0 Thanks
    potterspury
    Why not just continue with Aviva while you explore other options?

    You could consult an IFA.

    https://www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser
    Originally posted by xylophone
    Good idea. But I don't change easily so once with Aviva probably won't change for a long while. How much? Let's say I earn 1200- say 50?
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