40, female, self employed - no pension!!!

lemma1968

I am a 40 year old self employed female - married with 2 children.

My husband is a student on an NHS based degree that will provide him with a Band 5 salary to start with in 2 years. I don't know what pension he could get with that when the time comes. I know he has very little other pension entitlement. He has a frozen employer based one thats not worth much at all.

We have no savings, I am a higher rate tax payer.

I have a feeling that I will not be entitled to the second state pension as I am self employed, is that correct? Why is that?

I did a bit of research and found that Stakeholder pensions may be the way to go as low cost.

I have applied for one through Virgin Money intending to pay in £200 pcm with a 10% increase each year. If i can put in the odd lump sum then I shall do so as I go along.

i have been reading through various threads and have seen Virgin panned.

I am now slightly worried that I may have opted for a duffer. Part of the reasoning behind my choice was that their annual management charge was only 1% as opposed to the maximum 1.5%. They also allow you to monitor your account online.

So, in short......any advice would be welcomed. If anyone knows of any better providers (I understand that future growth cannot be guaranteed so past performance is the only real indicator) then I would be eternally grateful.

If this is better dealt with via a pm then so be it.

I have decided to take the plunge now as obviously investments are at almost rock bottom and i am hoping that my pension will benefit from the (fingers crossed) inevitable (?) long term rise (does that make sense?)

Cheers guys

dunstonh

I don't know what pension he could get with that when the time comes.

NHS Pension is based on years of service. The simple way of thinking of it is that you get 1/80th for every year. If you do 20 years you get 20/80ths of your pensionable salary which is a quarter.

I have a feeling that I will not be entitled to the second state pension as I am self employed, is that correct?

Correct.

Why is that?

You dont pay class 1 NI and the NI you do pay is less. Govt view is that self employed are prepared to pay less to look after themselves.

I did a bit of research and found that Stakeholder pensions may be the way to go as low cost.

I wouldnt have thought so at age 40.

I am now slightly worried that I may have opted for a duffer. Part of the reasoning behind my choice was that their annual management charge was only 1% as opposed to the maximum 1.5%. They also allow you to monitor your account online.

1% for a DIY pension is expensive. Thats more than you are paying if a multi-charge pension had been arranged via an IFA and identical (or possibly more) than if a mono charged stakeholder had been arranged via an IFA. You are basically paying for the cost of advice and servicing without getting any.

I have decided to take the plunge now as obviously investments are at almost rock bottom and i am hoping that my pension will benefit from the (fingers crossed) inevitable (?) long term rise (does that make sense?)

It will still be volatile for a while but logic would suggest that is a sensible view. Nothing is known about the future though.

lemma1968

[QUOTE=dunstonh;17468303


You dont pay class 1 NI and the NI you do pay is less. Govt view is that self employed are prepared to pay less to look after themselves.

I wouldnt have thought so at age 40.

1% for a DIY pension is expensive. Thats more than you are paying if a multi-charge pension had been arranged via an IFA and identical (or possibly more) than if a mono charged stakeholder had been arranged via an IFA. You are basically paying for the cost of advice and servicing without getting any.

It will still be volatile for a while but logic would suggest that is a sensible view. Nothing is known about the future though.[/QUOTE]

Thanks for that. But you have pressed my jargon button and now I have started to haze over.

Re the NI thing - I pay Class 2 ( ooops noticed DD no longer going out, need to check that), and obviously a proportion of my profits each year as NI in my tax return (don't I?) Its all Greek to me.

What is a mono charged stakeholder?

Why is stakeholder not necessarily the way to go at aged 40?

I need Pensions for Dummies. I'm generally not thick but figures are not my thing a all. I have been reading loads on this and the Govt websites but still a little perplexed.

Ta x

EdInvestor

To check your state pension forecast go here: https://www.thepensionservice.gov.uk

Your husband can also get a forecast.If you have not been self employed your whole careers you may have clocked up S2P entitlements.

A pension is a sensible move for a higher rate taxpayer, especially if you can make a contribution which brings you down to basic rate.

dunstonh

What is a mono charged stakeholder?

A stakeholder is a defined charging structure. It doenst mean its the cheapest. mono charge means the only charge is an annual management charge. Multi-charge means charges can be taken in different ways.

Why is stakeholder not necessarily the way to go at aged 40?

You are unlikely to be able to retire early (unless you have stashed your money elsewhere). So, you are looking at a state retirement age is 66. That means you have 26 years to go until retirement. Some modern personal pensions can beat stakeholder on charges when there is more than 20 years to go until retirement.

Ideally you want a balance between cost and features/funds. At the moment you are not going cheapest and if investing isnt your thing then you almost certainly are not going to get best there either.