pension advice for desperate ostrich

westiea

Hi
Have been burying my head in the sand for too long and would appreciate any advice, please be kind!
We are a married couple with 2 teenage children. My husband is 47 and has been self employed for 15 years, and has no pension. He previously worked at the post office and had a pension with them. I am 43 and work part time on a basic wage and again have no pension.We have no savings apart from about 55,000 in our house. Is it too late for us to start a pension or would we be better off in some sort of savings plan. We could only afford about 100 a month between us.

CIS

Note that your husband will have been building up basic state pension entitlement and you also may have been depending on your NI record and HRP recoed.

dunstonh

Although as your husband is self employed, he will get a lower overall state pension than most because he doesn't qualify for SERPS/S2P.

Its never too late to start saving for your retirement. Not unless you fancy living on £6822 a year (current maried mans pension with no serps,S2P or graduated).

A pension is a savings plan. There is no difference in the areas you can invest. There is only a difference in the way you get benefits and the taxation going in and coming out.

Ideally, you should plan your retirement income around both of you. For example, if you dont qualify for a state pension in your own right, your husband gets extra. So any personal planning should be done in your name to utilise the £7000 a year you can earn tax free at age 65.

westiea

Am know confused, what is HRP recoed and what is s2p? Is there a pension available for me that i can put in a flexible amount of money depending on my husbands employment, If not would I be better with an isa? I'm sorry but this is all a complete mystery!

exil

HRP. Home Responsibilities Protection. It's a way of ensuring you don't miss out on
a full State Pension due to taking a career break to raise a family. You should get it for every year you were paid child benefit.

S2P. State Second Pension. A top-up to the basic pension, based on lifetime average
earnings. You get this as long as you haven't contracted out, and as long as you're earning more than about 80 a week. As dunstonh points out, self-employed people
don't get it (in return for lower NI contributions) - a bit of a shock to me! Lucky I didn't go down the self-employed route earlier in my career....

Hubby's post office pension looks worth investigating. How many years did he work there?

How big is the house? That is, once the kids have left and the mortgage is paid could you sell it and get a smaller one?

EdInvestor

Start off by getting 2 state pension forecasts one for each of you.Apply here:

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

You can ask them about HRP and S2P as well.

Then get your hubby to write off to Royal Mail and ask how much pension he can expect when he retires.Also ask if this pension is index linked for inflation, and if there is a spouse's pension for you if hubby dies first and how much that is. Find out if there is an entitlement to take some of the pension as tax free cash.

As you don't get any free money from an employer and don't pay higher rate tax, you would be better to go for ISAs IMHO at present.The ISA allowance is a "use it or lose it" one, whereas from April the pension tax allowance can be claimed later much closer to retirement if you want to. Pension income is taxable when you retire, and since you will already have the two pensions (state and RM) better to go for the ISA, where the income is not taxable.

You could either choose a cash ISA, return around 4.75% no risk, or a stocks and shares ISA, estimated standard return 7%, various levels of risk from medium to high.

Another way to increase your savings is to overpay your mortgage - which gives you a no risk return of whatever the interest rate is on the loan.

westiea

Thanks to all for your helpful and informative advice. Am now going to investigate options suggested, with more knowledge and will start saving one way or another!