SAHM stakeholder pension or savings?

mum26

Hi, I'm 28 and currently at home looking after our children full time, I have no employment pensions at all, my partner is looking to set up one with his work and i've been thinking what I should do too.

Is it better to start a stakeholder pension (scottish widows?) for myself, i'd only be able to put a small amount in £20 / £30 a month or a savings account?

dunstonh

Pensions should be balanced between spouses. You can both earn £7000 a year tax free at age 65 (in todays terms). Say your partner has all the pension in his name and it brings in £14,000 a year. He will pay over £1000 a year in tax. If the pensions had been split between the two resulting at £7000 each income a year, that would be tax free and save you £1000 a year. Without costing you any more.

Savings are generally short term and accessible. Pensions tie the money up until retirement. The tax relief on the pension could be desirable if you are likely to be a non-taxpayer in retirement. Also, pension could increase you childrens/working tax credits, savings would not.

You mention Scot Widows. They have a very good fund range and a portfolio of 6-8 funds can be selected. However, do not buy the LTSB Bank version or the direct version. They are cut down versions of the full Scottish Widows product or in the case of the direct version, offers limited discount which can be bettered elsewhere.

EdInvestor

If you think you'll need to access any of the money before you are 55, use an ISA.If you think you might need to use ALL the money some time, definitely use an ISA.

You can always move the money into a pension later to get the small extra bit of tax relief it offers, if you feel it's worth the downside of losing access to the capital forever.

mum26

thanks for your advice both of you xx