Aged 36: Should I be thinking about a pension?

Fire_Fox

Hi

I am 36 and have quite a chequered work/ pension history

- three years full-time paying into the NHS pension scheme
- three years full-time paying NI
- three years part-time paying into the Cambridge Uni scheme
- two years working part-time in a shop just paying NI
- two to three years on Incapacity Benefit (?NI paid I think)
- less than six months on Jobseekers Allowance
- less than six months working part-time
- one year full-time paying NI
- two years as a full-time student, working part-time
- one year as a full-time student but paying into the NHS scheme again.

None of my jobs have been well paid, so I don't suppose I have much in the way of pension provision. I own my flat outright, have two years of cash ISA maxed out, plus some other bits and bobs of savings - basically my savings and student loans cancel each other out.

I hope to purchase a second property with my partner in the next couple of years and can access additional money for a deposit. I don't have children and I think it unlikely I will at this stage in my life. I don't ever think I will earn a decent salary, and will probably return to education so not regularly work full-time.

Not really sure where to go from here, I am sure I should be a bit more organised about my pension provision. Should I be trying to find out what I can expect? Should I be telling anyone where I live now? Should I be amalgamating the amounts that are available? Is it likely I will get any state pension at all - I thought the government were inteding to do away with it? Should I even worry, I really don't need a lot to live on and will have my flat, savings and probably a decent inheritance (sorry if that sounds awful ).

stephenni1971

You are right when you say you have had a chequered work history!

In your case it may be worth submitting a form BR19 to the Department of Work and Pensions. They will then produce a forecast of your likely pension entitlement and give you some idea where you are at.

It's all very well saying 'I don't need much to live on' but realistically the basic state pension is a pretty low sum and anything you can do now to increase your income in retirement is worth looking at.

There are stakeholder products available which, while providing limited investment choice, do have low fees and charges, and these may be an option for you to look at.

You can pay as much as you want into the pension, however you only get tax relief up to your relevant UK earnings ( effectively your income for the year ). Even if you are out of work you can still get relief on £2880 of contributions ( giving a gross contribution figure of £3600 with tax credited).

For virtually everyone, a pension is a very sound idea.

DiggerUK

@ Fire Fox,

Mr. Winners ads to calm down have worked on you!!!

Just a quickie, if your debts are student loan then you will more than likely be taking advantage of a low RPI. If that is the case keep cash in Isa's or similar savings.
If you have higher rate debts (C/C.,C/A..) then pay them down.

From info you give can't see how you will get mortgage for a BTL property. Must work if you want that.

Fire_Fox

Thanks both for your replies: I will apply for the pension forecast as advised.

My chequered work history is down to several contract jobs, moving to be with (now ex) husband, illness, moving to be near parents, returning to study not completed due to aforementioned illness. I have never been sacked and have excellent references. It just sounds awful when I put it down in black and white!

I keep a spreadsheet - sad I know - of my income and outgoings and am presently saving £450 a month, tho this won't continue if I don't go back to uni next year (likely). My essential outgoings are about £1000 a quarter, but this includes our very very overpriced service charge which I have been disputing for two years.

The first two years I was back in education I did not bother to get a student loan, managed fine without it. This year I retrospectively applied for the student loan because the interest rate is so low! I have no credit card or other loan at all. My debts are made up of student loan (about £5k), and two years of service charge (£4k). I cannot count my chickens - hence the savings - but I am reliably informed we have a very good case on the service charge and I won't have to pay most of this.

The second property would not be buy-to-let, I would rent out my flat and the new property would be to live in. I cannot sell the flat with this service charge dispute and due to the regeneration of the area this is a ten year investment to me. Mr. Fire Fox has a very good deposit saved and an OK job, and I could use this flat which is mine outright as security if needs be. I will work, but in the NHS I don't expect a high salary. My parents paid my brother's deposit and have indicated there is money for me if I need it which I have not wanted to accept so far (count myself very lucky).

Hope that all makes sense now!

Fire_Fox

I have just dug out my payslips/ tax folder and found a letter from HM Revenue and Customs from 2006 advising me that I am short on NI contributions for the 2004/05 tax year! I don't remember receiving it, but I had just relocated and started a new job and course.

The letter says I can pay £93 by April 2011 to make the year pensionable. Can I still do this as I have the letter, or do I have to pay double now as Martin's article suggests?

EdInvestor

First get a pension forecast www.thepensionservice.gov.uk

Get one for your husband too.You won't have to pay double.

Fire_Fox

Just rung to order the forecast - I will have to pay at the higher rate if I want to catch up the lost weeks from 2004/05.

chesky369

By the time you retire, you will probably only need 30 years' worth of NI contributions which I think you should easily be able to make up.

Fire_Fox

OK so I have my pensions forecast and have attempted to read the enclosed booklet. It's now absolutely clear I have zero knowledge in this area. I didn't even know we had two levels of state pension!

My forecast says I have 19 qualifying years which would be every single financial year since I started working (part-time) at 16. However it also says I haven't paid enough for 2004/05 which would cost over £150 to catch up: I was on Incapacity Benefit in 2004 and Jobseekers Allowance from January to April 2005 when I was well enough to return to work.

Also haven't paid enough for 2003/04 which would cost be over £600 to catch up! :eek: If memory serves me correctly I first went on long-term sick in January 2003, was on SSP until December 2003, then no income for six months until June 2004 when they paid Incapacity Benefit backdated to December 2003.

So I don't understand how I can have 19 qualifying years of which two I have not paid enough for them to qualify?? Also don't understand why I haven't paid enough as I thought my National Insurance was paid whilst on benefits?

I think I will get the full basic state pension as I only need another 11 years of paying National Insurance: how do I know if any given year working part-time is enough to qualify tho?

seven-day-weekend

Your retirement age will not be until you are 65-68 (not sure), but even if it's 65, you have nearly 30 years left to pay 11 years NI, so if you are going to work in the future I wouldn't bother paying those missing years now.

I am not a pensions expert though, so if I'm wrong someone please correct me!

chesky369

yes, 7-d-w is absolutely correct; you really don't have to worry about missing two years of your total working life. In the scheme of things it'll be a mere drop in the ocean of your N I contributions.