no pension, 42 female - where to start?

mirrormirror

Title says it all!

I have no pension provision, and am 42 female.
i want to start something - anything now - what type of pension should i go for?
I dont have loads of cash or any savings at all, I can get bonuses at work sometimes, which i would like to be able to put in as one off payments if that is possible. What type of pension should i look at? And how do i go about it?

Help me please!!

EdInvestor

The first thing to do is to find out how much you are going to get from the two state pensions.

Get a forecast here:

https://www.thepensionservice.gov.uk

Do you own your own home?

mirrormirror

I have registered for the forecast, and am told i will get an activation code in the next 7 - 10 days and then i can log on again and get my forecast - thanks!
Yes, i jointly am a homeowner (with mortgage) which should be paid off in the next 5 years.

mirrormirror

I have tried to get the pension forecast online, and after waiting for my log in details etc through the post have now had to apply for a manual forecast after all, which will take another 12 days! because apparently it couldnt forecast it - something wrong with the system...
Any way - it wont be much i dont think.
Can any one help me with what type of pension would be good to start asap now?
I earn 18k, and have bonuses every now and then of 1.5k(sales job) poss about 2 0r maybe 3 a year.
I could put some of this into a pension - but i have a lot of ties on the money and would struggle to get more than £100 a month to put in - but need something i could put more in if i had it.
Can someone advise me please?

dunstonh

Can any one help me with what type of pension would be good to start asap now?

Probably a personal pension or a stakeholder. I think its safe to rule out a SIPP as thats the experienced investor option and you wouldnt be asking the questions if that was you.

but i have a lot of ties on the money and would struggle to get more than £100 a month to put in

Its not bad as a starting amount. Problem is that you are starting late so you have 20 years of catch up to do. Paying in around 6% of your income with no prior provision at age 42 is on the low side. You should be aiming for double that. However, you can work in stages... as long as you do.

What provider and option will depend on what you are looking for and how you intend to purchase the pension (as not all pensions are available on different distribution channels).

Can someone advise me please?

Best place for advice is a local IFA. Check out www.unbiased.co.uk . Do a post code search and untick the box that says only show paying IFAs (IFAs can pay to enhance their listing to make them stand out more. The tick box will show all IFAs if unticked or only those that pay if it is ticked. Unticked is best but it defaults to ticked).

mirrormirror

is it best to choose an ifa that charges fees and commission or just fees?

EdInvestor

mirrormirror wrote: »

Any way - it wont be much i dont think.

If you have always worked and never paid into a personal or company pension, you may get a pleasant surprise

Can any one help me with what type of pension would be good to start asap now?

First of all, a pension is only a tax wrapper and it's not the only one.You may be better off using your ISA allowance to make retirement savings because you have no free money from a company going in and pay basic rate tax. Income from a pension is taxed in retirement, so there may be little advanatge in using this very inflexible wrapper for your savings.An ISA, where you can access the capital and the income is tax free may be a better choice - the investment options are the same.

But we really need to know the state pensions amount.If it is around the 10k level, the ISA will be the best choice.If it's more like 5k, then you should go for a low-cost pension. The reason for the difference is that you can earn 10k a year in pensions when you are over 65 tax free. Anything over that is taxed @20%.So if your state pension is already going to use up most of that allowance, the tax free ISA would be a better bet for your extra savings.If it's only small, it's worth getting a pension to provide extra income so the rest of the allowance isn't wasted.

dunstonh

mirrormirror wrote: »

is it best to choose an ifa that charges fees and commission or just fees?

It depends really on how much you pay in the end. Smaller transactions are often worth doing on commission basis and larger ones on fee basis. There is also the option to agree a fee but take commission to that amount to offset that fee. The latter works well with pensions as you effectively get tax relief on the fee.

If you went down the stakeholder route, I would probably say commission at £100pm is the best option. If you went down the personal pension route then probably fee basis (with fee taken from pension).

However, like other retailers, IFAs charge different amounts. Some may say a £500 fee for this, others may say £2500 (to price you out as they dont really want you). A decent IFA will not hide from the charge options you have available. Also, remember that the IFA will be cheaper and better than any tied agent or insurance sales rep and usually cheaper than buying direct.

toby_puppy

mirrormirror wrote: »

I have registered for the forecast, and am told i will get an activation code in the next 7 - 10 days and then i can log on again and get my forecast - thanks!
Yes, i jointly am a homeowner (with mortgage) which should be paid off in the next 5 years.

You're in a similar position to me! Mortgage due to finish 5 years time (I'm 37) and my other half is 42 and we have both put off getting pensions until now (I think it's the prospect of thinking about old age)
We went to see an independent financial advsior last month and have taken out a personal pension each which can be increased when we pay off our mortgage, so we will have to play a bit of catch up. She said it's always better late than never and at the moment it would probably seem a better idea than investing in the rental property market - which we had been intending doing until the recent crunch! :eek:

mirrormirror

Well - I saw a pension advisor, and he advised me to get a stakeholder pension - i am going for the low risk route at the moment, and if i have any extra to pay in then i will be able to. At least i am starting something!
He is sending a few things for me to compare through the post and a recommendation and i will be starting in January! Probably with a big company like Prudential or Norwich Union etc - but he wasnt sure if with Prudential there was a minimum I can pay in for one off payments.
Thanks for everyones help

Primrose

Does your company not run a pension scheme? If it does and it makes a contribution towards an employee's pension you would obviously be well advised to go that route. If not, a Stakeholder pension might be a good idea as I believe the fees for these are limited so would be a low cost but an IFA would be able to advise you. I'd recommend opting for one who charges a fee rather than commission and then you will know exactly what the overhead would be.
Alternatively, you could put some savings for your retirement into a ISA (either Cash or unit trusts). Any income you eventually draw from this would be tax free, whereas with a pension, your contribution are made free of tax but the income you draw from them is taxable.