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  • FIRST POST
    • TootsMart
    • By TootsMart 27th Nov 17, 1:12 PM
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    TootsMart
    Pension Planning or Not???
    • #1
    • 27th Nov 17, 1:12 PM
    Pension Planning or Not??? 27th Nov 17 at 1:12 PM
    Hi all. New to this. Seen to be plenty of savvy savers out there so hope you can advise me.

    If you have say £100 a week to put away what would be the best thing to do with it to get a safe and decent return on after say 10 years? Is it worth putting into state pension contributions or something else?

    Thanks and look forward to hearing from you.
Page 1
    • enthusiasticsaver
    • By enthusiasticsaver 27th Nov 17, 1:35 PM
    • 4,856 Posts
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    enthusiasticsaver
    • #2
    • 27th Nov 17, 1:35 PM
    • #2
    • 27th Nov 17, 1:35 PM
    Too vague to give any meaningful advise.

    How old are you and do you have an occupational scheme? How much is it worth?

    How much do you earn and what rate do you pay tax at? Do you have full state pension contributions so far? Do a check on the gov.uk site.
    1 week to go until early retirement. Debt free and mortgage free.

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Nitram29
    • By Nitram29 27th Nov 17, 1:45 PM
    • 20 Posts
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    Nitram29
    • #3
    • 27th Nov 17, 1:45 PM
    • #3
    • 27th Nov 17, 1:45 PM
    £100 a week is five grand a year, a decent amount and what you do with it depends on if you want access to it or are prepared to lock it away.

    What I do is split my savings from take home pay between an ISA and regular saver.

    If you have no need to get to it before 55 then putting it into your pension or opening a straightforward self invested pension, one run with passive investments, is another thing to look at.
    • lisyloo
    • By lisyloo 27th Nov 17, 1:59 PM
    • 21,319 Posts
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    lisyloo
    • #4
    • 27th Nov 17, 1:59 PM
    • #4
    • 27th Nov 17, 1:59 PM
    Is it worth putting into state pension contributions or something else?
    You don't contribute like that to the state pension (only through your nation insurance).
    If you don't need this money until 55 then it's very trax efficient to use a pension wrapper.
    If your employer has a scheme then that's usually the first place to start because they might contribute and also they might operate a salary sacrifice scheme where it come out gross so you save 20% tax, 12% NI and they might even pass on the 13.8% employers NI that they save (figures assuming you pay basic rate tax).
    • bigadaj
    • By bigadaj 27th Nov 17, 5:49 PM
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    bigadaj
    • #5
    • 27th Nov 17, 5:49 PM
    • #5
    • 27th Nov 17, 5:49 PM
    You don't contribute like that to the state pension (only through your nation insurance).
    Originally posted by lisyloo
    State pension accrual can be purchased retrospectively, maybe this is what the OP means and has missing years.

    Whether it is wise and the best option to do so depends on their particular circumstances.
    • squirrelpie
    • By squirrelpie 27th Nov 17, 6:52 PM
    • 14 Posts
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    squirrelpie
    • #6
    • 27th Nov 17, 6:52 PM
    • #6
    • 27th Nov 17, 6:52 PM
    "If you don't need this money until 55 then it's very trax efficient to use a pension wrapper." The potential advantage of pension contributions is the differential tax rates. If you're a higher-rate taxpayer whilst earning and a standard rate taxpayer whilst collecting your pension, then it makes a lot of sense. But not so much sense if you aren't. An ISA is an alternative. Sure there can be marginal gains from having more invested in the pension (SIPP) as a result of tax-free contribution plus tax on exit. But there's a certain freedom from being able to take whatever money you want from an ISA tax free whenever you want, unconstrained by whatever byzantine rules the government may invent for pension schemes.
    • IanSt
    • By IanSt 27th Nov 17, 7:11 PM
    • 153 Posts
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    IanSt
    • #7
    • 27th Nov 17, 7:11 PM
    • #7
    • 27th Nov 17, 7:11 PM
    If you have say £100 a week to put away what would be the best thing to do with it to get a safe and decent return on after say 10 years?
    Originally posted by TootsMart
    You mention 'safe' which would normally rule out investing the money as there is always the chance of your investments going down in value, but then go on to say 'decent' which in the current high-inflation world would rule out saving in a cash based account.

    Most people on this board would see a ten year timeframe as being eminently suitable for investing the money as there is plenty of time for any investments to recover from any stock market falls; but if you are the type of person who would cash in those investments because they'd fallen 10% then they'll never recover.
    • bigadaj
    • By bigadaj 27th Nov 17, 9:38 PM
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    bigadaj
    • #8
    • 27th Nov 17, 9:38 PM
    • #8
    • 27th Nov 17, 9:38 PM
    "If you don't need this money until 55 then it's very trax efficient to use a pension wrapper." The potential advantage of pension contributions is the differential tax rates. If you're a higher-rate taxpayer whilst earning and a standard rate taxpayer whilst collecting your pension, then it makes a lot of sense. But not so much sense if you aren't. An ISA is an alternative. Sure there can be marginal gains from having more invested in the pension (SIPP) as a result of tax-free contribution plus tax on exit. But there's a certain freedom from being able to take whatever money you want from an ISA tax free whenever you want, unconstrained by whatever byzantine rules the government may invent for pension schemes.
    Originally posted by squirrelpie
    You seem very confident that the government won't !!!!!! about with isas rather than pensions, I'd suggest there's some risk for isas as well.
    • dunstonh
    • By dunstonh 27th Nov 17, 10:43 PM
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    dunstonh
    • #9
    • 27th Nov 17, 10:43 PM
    • #9
    • 27th Nov 17, 10:43 PM
    But there's a certain freedom from being able to take whatever money you want from an ISA tax free whenever you want, unconstrained by whatever byzantine rules the government may invent for pension schemes.
    It is worth noting that the last 30 years have seen only increases in options flexibility and accessibility except for one thing. The increase from 50 to 55.

    Whilst the money is in the pension, it has the same tax free status as the ISA. The cost to the treasury is the same whether it is ISA or pension. The economy gains from people accessing their pension. The only reason the Govt holds back on the start age is that some people will blow it too early if they didnt.

    The single biggest cost to the Govt is tax relief. Most people consider that the next target when it comes. Along with salary sacrifice for employees (the biggest annually increasing cost). Money in the pension, once it is there, doesnt really cost the Govt much. So, there is little incentive to change that.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • atush
    • By atush 29th Nov 17, 6:14 PM
    • 16,386 Posts
    • 10,139 Thanks
    atush
    Hi all. New to this. Seen to be plenty of savvy savers out there so hope you can advise me.

    If you have say £100 a week to put away what would be the best thing to do with it to get a safe and decent return on after say 10 years? Is it worth putting into state pension contributions or something else?

    Thanks and look forward to hearing from you.
    Originally posted by TootsMart
    How old are you? What is your income? Have you joined your employers pension? Do you have an emergency savings pot? Do you own your own home? Do you have a spouse? Their ension plans? Dependents?
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