Is now a good time to start a pension?

discoinferno_99

With all the current turmoil and uncertainty in the financial markets, it has made me take stock of my finances and plan a bit more for the future. I'm fortunate to have a decent job and most other financial affairs well planned. However I'm now 34 and still don't have a pension.

I have access to a work stakeholder scheme, but there are no employer contributions so it has not been attractive to sign up, so I have been embarassingly ostrich like for a few years and avoided doing anything.

As a higher rate tax payer, I really think I should be getting a pension started up. The question is is it a good time to start a penion at the moment? If so, does anyone have any recommendations on the best way to approach it? Research sources, IFAs etc?

Thanks in advance for any guidance.

dunstonh

However I'm now 34 and still don't have a pension.

oh dear. However, its better worded as retirement provision than pension as there are multiple ways to cover your retirement and pension is not the only thing.

I have access to a work stakeholder scheme, but there are no employer contributions so it has not been attractive to sign up, so I have been embarassingly ostrich like for a few years and avoided doing anything.

In most cases, if there is no employer contribution then dont go for the works scheme. You may as well choose the best pension to suit your needs and not the one the employer put in place on paper to satisfy rules (which are in the process of being abolished and are already not enforced).

The question is is it a good time to start a penion at the moment?

There is never a bad time to make provision for your retirement.

If so, does anyone have any recommendations on the best way to approach it? Research sources, IFAs etc?

There is no one size fits all solution so unless you know the subject, know the providers, investment options and product options then you are best to use an IFA. At your age its probably the cheapest option as well (cheaper than DIY) as IFAs will have access to products which you cannot buy direct but are cheaper than zero commission stakeholder pensions for example.

discoinferno_99

dunstonh wrote: »

oh dear. However, its better worded as retirement provision than pension as there are multiple ways to cover your retirement and pension is not the only thing.

Thanks for the feedback. To be fair, in terms of retirement provision I am not completely deficient, I do own a property outright that I rent out. I am just very aware after the latest financial issues that a balanced approach for the future is needed. (i.e. don't just bank on bricks and mortar)

I also agree about utilising an IFA as I would feel more comfortable going down that route. I can research things to the hilt myself, but understanding the pros and cons, plus some interpretation (and access to products) is what I felt I may need.

Definitely one to ponder overnight!

HarryD

The best time to start a pension is when you can afford to. As a 40% taxpayer if you earn say £20K which is taxed at 40% you can put the after tax £12K into a pension and HMRC put the £8K income tax into the pension plan. It is a very nice feeling to know that you are not paying a penny in income tax at 40%.

HarryD

dunstonh wrote: »

At your age its probably the cheapest option as well (cheaper than DIY) as IFAs will have access to products which you cannot buy direct but are cheaper than zero commission stakeholder pensions for example.

Most interesting. I have a stakeholder pension plan going in to a tracker unit trust and the annual charge is just under 1% - could I get a lower annual charge by going through an IFA?

dunstonh

Most interesting. I have a stakeholder pension plan going in to a tracker unit trust and the annual charge is just under 1% - could I get a lower annual charge by going through an IFA?

Yes. 1% amc is full commission basis for stakeholder. Nil commission stakeholder would be around 0.5-0.6% (depending on fund value). I did a 0.3% amc personal pension recently

HarryD

dunstonh wrote: »

Yes. 1% amc is full commission basis for stakeholder. Nil commission stakeholder would be around 0.5-0.6% (depending on fund value). I did a 0.3% amc personal pension recently

That is good. The 1% I referred to is the annual management charge within the unit trust in which my stakeholder is invested.

Is your 0.3% stakeholder invested directly in shares and so has no other management charges?

dunstonh

s your 0.3% stakeholder invested directly in shares and so has no other management charges?

It wasnt a stakeholder. It was a personal pension. It was invested into funds with just the charge on the fund.