i have no pension. age 33. help!

pKaTz

Hi.
I'm 33 married with 6mth child.
Have no pension.
Earn about 16k yr gross.
Mortgage £35k remaining - 7yrs.
What options regarding a pension available to me. esp in the current climate.
Is a stakeholder the only option - are all stakeholders the same. [ie charges & returns etc]
there is no contributory pension from work - only stakeholders.
would it be better for me to open a stakeholders with say, tsb, or go thru who my work recommends.
thx
I'm truly confused

Pssst

I wouldn't bother. Enjoy your life now,in the present. Sure save a little..maybe buy a bigger house or a property abroad that you can retire to and let out as a holiday let in the interim but dont sweat to invest in a pension. All that will happen is that those who have not provided will get looked after whilst you will be left in penury.

pKaTz

are u saying just use isa's and savings accounts. or bricks n motar investments

dunstonh

What options regarding a pension available to me. esp in the current climate.

Options are no different. There is no current climate decision to make. Events like this happen frequently enough (8 since 1956, average of every 7 years - last one saw the markets drop more than they did this time round)

What options regarding a pension available to me. esp in the current climate.
Is a stakeholder the only option - are all stakeholders the same. [ie charges & returns etc]

You have stakeholders, personal pensions, SIPPs and stocks and share ISAs as the main options. They are all different. You can probably rule out SIPP as they are for experienced investors. At your age, personal pensions are the cheapest for funds. Stakeholder is the simplest but not the best.

would it be better for me to open a stakeholders with say, tsb, or go thru who my work recommends.

dont buy through a bank sales rep. Its full cost and basic advice only. If you need advice you should see an IFA. An IFA would be a lot cheaper than the bank as well as giving you whole of market. DIY is cheaper but it appears you need the advice.

I wouldn't bother. Enjoy your life now,in the present.

And then live on the basic state pension of £4700 when you are 67. (yes, 67 as state retirement age is going up for you).

Sure save a little..maybe buy a bigger house or a property abroad that you can retire to and let out as a holiday let in the interim but dont sweat to invest in a pension. All that will happen is that those who have not provided will get looked after whilst you will be left in penury.

That is very naive to think that will work.

pKaTz

Thanks dunstonh. Thats some good answers there.
I will look into those options.
Is there truth what people say about pensions though -
"u need to take ur age as a percentage of ur salary and put that into it each month"?

EdInvestor

It's not correct to say you have no pension at all. Suggest you check out your entitlement to the 2 state pensions first (and your wife's as well). The tax system these days makes it best to equalise pensions between spouses if possible.

Get a forecast here: https://www.thepensionservice.gov.uk

You may find it's best to save for now in ISAs, whether cash or Stocks and shares (similar options to a pension ) and then contribute to the "Personal Accounts" that all companies will have to offer from 2012 and which will feature a matching company contribution.

Pensions with no company contribution are not very attractive for basic rate taxpayers

Richard_Cocks

Are you sure your work won't contribute to a stakeholder pension?

That's pretty !!!!!! of them and it's worth trying to negotiate it at the next round of pay reviews, it's tax efficient for both your employer and yourself.

Most employers are required by law to offer access to a stakeholder pension, so even if they won't contribute, you should still (if going down the stakeholder route) get it via your work as it's probably cheapest to do it this way.

Having said that, there are also SIPPs and other options like ISAs to consider.

Sasslan

I would think carefully about a pension unless you have the extra cash to spare. Firstly, where there's a pension fund, someone is making money out of it - my view is that the Government encourages pensions because their City friends like it, and because it removes some of the burden from them when people retire.

I think in years to come as the number of pensioners starts to converge with the number of people working, a future Government will one day rewrite the rules on pensions. They will means test them so that anyone who can support themselves on even the smallest pension which they have paid into will have to go without the State Pension, and only those who can show they have next to nothing saved or no assets, will get the State hand out.

Allowing for inflation and ups and downs of the stock market, and fees, I think a fair approach is to assume that in spending power terms you will get out of a pension about the same as you pay in. So unless you can afford to save a lot, then personally I would consider the following. First start saving in a high interest account, or if you feel bold and can afford to put the money aside for 5-10 years, invest in an ISA tracker (don't bother with managed funds and their fees - then you take two gambles, will the market go up, and have I chosen a fund manager that will pick the right stock - with a tracker you only rely on the first variable). Over time, the FTSE will recover, it always does as soon as the bargain hunters pile in, which they will provided you can wait a few years. Then you can plan to save enough for a deposit on a property. And, should anything happen to you, your family can keep the property or sell it, whereas a pension fund is not quite so flexible.

dunstonh

Most employers are required by law to offer access to a stakeholder pension

That is no longer the case.

you should still (if going down the stakeholder route) get it via your work as it's probably cheapest to do it this way

Dont count on it. The majority of group personal pensions/stakeholders exist on only paper for when it was law. No special terms were negotiated for the vast majority as companies placed a low priority on it.

It's worth finding out the charges but dont assume they are cheaper. For example, if you are 30 and paying £100pm into a personal pension then that can work out cheaper than a stakeholder pension on nil commission terms.

In 2012 the NPSS is coming and that will have employer contributions. Some companies are gearing up for that already but many dont have a clue its coming.

Day_Trader

Sasslan wrote: »

I would think carefully about a pension unless you have the extra cash to spare. Firstly, where there's a pension fund, someone is making money out of it - my view is that the Government encourages pensions because their City friends like it, and because it removes some of the burden from them when people retire.

The govt encourages pensions to remove the burden on the individual and make it easier for them in retirement. It encourages people to take responsibility for themselves - why is this a bad thing?

Sasslan wrote: »

I think in years to come as the number of pensioners starts to converge with the number of people working, a future Government will one day rewrite the rules on pensions. They will means test them so that anyone who can support themselves on even the smallest pension which they have paid into will have to go without the State Pension, and only those who can show they have next to nothing saved or no assets, will get the State hand out.

Speculation and unlikely. Any govt reducing/removing state pension will not be reelected. There would be public outcry.

Sasslan wrote: »

Allowing for inflation and ups and downs of the stock market, and fees, I think a fair approach is to assume that in spending power terms you will get out of a pension about the same as you pay in.

Do you know how pensions work? Have you equally analysed the stockmarket over the past 100 years. Take a decent investment timeframe and equities outperform all other investments.

Sasslan wrote: »

So unless you can afford to save a lot, then personally I would consider the following. First start saving in a high interest account, or if you feel bold and can afford to put the money aside for 5-10 years, invest in an ISA tracker (don't bother with managed funds and their fees - then you take two gambles, will the market go up, and have I chosen a fund manager that will pick the right stock - with a tracker you only rely on the first variable).

Whilst there will always be an argument as to whether fund managers add value there are a lot of funds out there that consistently beat the market. Aggressive strategies could see returns of 8-10% after charges. High interest savings accounts will be taxed at 20% (savings rate) with a further 20% due if you're higher rate taxpayer. Returns over inflation will be limited and if inflation rises whilst you are locked into a rate then it could even erode the capital. ISA tracker?! Just because they aim to track the FTSE All Share/FTSE 100 (if that is what they are tracking) doesn't mean they will. Compared to specialist funds they perform poorly.

Sasslan wrote: »

Over time, the FTSE will recover, it always does as soon as the bargain hunters pile in, which they will provided you can wait a few years. Then you can plan to save enough for a deposit on a property. And, should anything happen to you, your family can keep the property or sell it, whereas a pension fund is not quite so flexible.

The FTSE will always recover? Yes like the Nikkei 225 has in Japan :rolleyes:. Property is a great investment - I here subprime is an unexploited area.

This is either a complete wind up post or you are incredibly naive.