Job Changes, State Pensions and Advice

Toadeh

Hi All,

I've been reading around for about a week now on what to do for a pension (ISA or PP or SHP). I can't trust myself so the ISA is out, and (correct me if i am wrong) the PP offers more control over what ratio it is invested in what areas.

Anyway, I'm 26 now, I did have a pension at my old work which was moved about lots, its now with scottish widows. I have 4 questions really:

1) The scottish widows pension, can I/should I move it to another company when I start my new pension?

2) When I actually retire, what is the likelyhood that the state pension will exist? I mean, should I assume its not going to be there just in case?

3) I work in IT, its not likely I will stay at the same company for a vast length of time (more than 7 years), If I have a PP and the other company has a scheme which they pay into, would I be best to pay into both or is this not possible?

4) What sort of yearly amount should I be looking to get in my old age, 12k, 15k more, less???

Thanks guys, If I;ve not mentioned anything let me know

Cheers

dunstonh

and (correct me if i am wrong) the PP offers more control over what ratio it is invested in what areas.

Depends on the size of pension and provider but typically yes. With a pension you can allocate the contribution right down to 1% going into one fund if you wanted. With a regular ISA you are limited by an amount which is typically £50, although some do go as low as £20.

1) The scottish widows pension, can I/should I move it to another company when I start my new pension?

Can you? - yes. Should you? - cant say as we dont know what version of scottish widows plan it is and what you would transfer it into.

2) When I actually retire, what is the likelyhood that the state pension will exist? I mean, should I assume its not going to be there just in case?

Almost certainly the basic state pension will exist. The Govt has already taken some action to help reduce its liability for the future by increasing your state pension age to 68. Pension credits will be following that as well.

The second state pension is the one that is often considered at risk. That is often being played around with and has been reduced 3 times already retrospectively (4th time is coming). Unless you are planning accurately it is often worth disregarding the second state pension and planning on the assumption of the basic state pension only.

3) I work in IT, its not likely I will stay at the same company for a vast length of time (more than 7 years), If I have a PP and the other company has a scheme which they pay into, would I be best to pay into both or is this not possible?

You can pay into as many as you like at once.

4) What sort of yearly amount should I be looking to get in my old age, 12k, 15k more, less???

You are looking at it the wrong way round. You need to decide what you want in retirement and when you want retirement to occur. Then you cost it backwards to see how much you need to put aside assuming a growth rate and inflation rate.

jamesd

1. You can move it if you like. It's worth checking to see if it's offering a particularly good deal before you do. The costs might be lower than the new one, in which case it'd make sense to leave the old money with the original pension unless you like to have everything in one place.

2. The state pension or means-tested benefits will be around in some form but it's prudent to arrange to have a safety margin.

3. You can have an unlimited number of pension plans at the same time. You'll probably have to pay into the plan for the new company to get their matching contributions. They might let you transfer money from that one to your own while you still work for them. Mine does, though I'm only the second person in the company to ask about it. You might want to do this to get a broader range of investment choices or lower costs.

4. The amount is up to you. Decide how much you want to have to live on and go for at least that plus a 30% safety margin to allow for stock market performance variations. For a rough working number I assume that a single person can pay rent and bills and live reasonably on about 12k a year. That will vary depending on local cost of living - it'll be too low for London, too high for much of the country.

I've assumed that all of the plans are money purchase, not final salary. You can transfer final salary plans as well but the process is more cumbersome.

Toadeh

Excellent guys, its slowly starting to make more sense now

Thanks very much