should i keep paying £100 into a stakeholder pension or put the money elsewhere??

hostertlady

I have no idea at all about my stakeholder pension- i took it out quite late in life (am 47 now), am not paying NI at the mo but have done over the years.. so had an IFA come down and chat and he suggested doing this(stakeholder) but to be honest is it the best thing to do? i will probably return to work at some stage so will at least get the state retirement pension ( if it's still around).
anyone any (simpleish) advice for me? sorry to sound dumb

dunstonh

The IFA would have made the recommendation based on obtaining details on your circumstances and requirements. Your single paragraph is nowhere near sufficient to judge whether it is appropriate or not.

However, to keep it really simple. If you want an income in excess of state pension at retirement, then that is what the stakeholder pension will provide. Its cheap, it gets tax relief and will give you an income in retirement.

mr_fishbulb

dunstonh - do you agree with Martin's figure on his pensions article that when you first start a pension you divide your age by 2 and that's the % of your salary you need to save to get a 2 thirds retirement?

Is that %age of your gross or net pay?

Cheers

margaretclare

Which organisation is your stakeholder with?

They should be sending you regular statements, or you can contact them and ask for one. I access mine online and check it daily.

Don't forget that for every £1 you put into your stakeholder the taxman adds 22p, that's if you're a basic-rate taxpayer. So if you pay in £78 it immediately becomes £100 which is invested in whichever funds you chose. You can switch, you can move the stakeholder, and certainly you should know how it's doing.

It doesn't matter whether you're earning or not. As they say on here: 'there is no substitute for doing your own research (DYOR)'. You should have some paperwork about the stakeholder - dig it out and then come back and tell us who it's with and what it's worth now.

Aunty Margaret

dunstonh

mr_fishbulb wrote:

dunstonh - do you agree with Martin's figure on his pensions article that when you first start a pension you divide your age by 2 and that's the % of your salary you need to save to get a 2 thirds retirement?

Is that %age of your gross or net pay?

Cheers

It's a good rough guide to get you thinking. However, it is a generalisation which may be inappropriate for those that want a higher income in retirement or for those that want to take lower risk with their investments. It only works if you index link your contributions as well. You wouldnt believe the number of people who started with say, £50 back in 1988 and have never increased it since.

You should compare gross contribution with gross pay (or net with net).

mr_fishbulb

margaretclare wrote:

Don't forget that for every £1 you put into your stakeholder the taxman adds 22p, that's if you're a basic-rate taxpayer

Can you work it so your employer pays straight into your stakeholder pension before tax, or do you have to be paid, taxed, then put it into a pension and the tax gets added back to it?

mr_fishbulb

dunstonh wrote:

It's a good rough guide to get you thinking. However, it is a generalisation which may be inappropriate for those that want a higher income in retirement or for those that want to take lower risk with their investments. It only works if you index link your contributions as well. You wouldnt believe the number of people who started with say, £50 back in 1988 and have never increased it since.

You should compare gross contribution with gross pay (or net with net).

Thanks

About the gross - I meant to say if I need to contribute 13% of my salary to my pension. Is that 13% of my salary before tax or 13% of what I take home after tax and NI?

EdInvestor

hostertlady wrote:

I have no idea at all about my stakeholder pension- i took it out quite late in life (am 47 now), am not paying NI at the mo but have done over the years.. so had an IFA come down and chat and he suggested doing this(stakeholder) but to be honest is it the best thing to do? i will probably return to work at some stage so will at least get the state retirement pension ( if it's still around)....

May I suggest you get a state pension forecast?

Apply here

If you have a full NI record, then the two state pensions, basic plus S2P, should take you well beyond pension credit level, and thus the stakeholder would be a reasonable idea (though an ISA might be better).

But if your records is incomplete and you won't get much more than the basic, then there's no point in saving in the stakeholder, as the Government will top your pension up with pension credit anyway for free.

While you're talking to the pension people, see if it would be good to pay voluntary contributions to keep your record as full as possible, and also check out any Home Responsibilities Credits you might be due in the past.

People criticise the state pension, but it would cost a woman almost 100k to buy an inflation-adjusted income of the same size in the market these days, annuities are now so expensive

hostertlady

i do look at my statements and i know they are a good thing in that whatever i (hubby) puts in the taxman adds some but if they are such a good thing why haven't more people taken them up?
my stakeholder is with Clerical medical and is currently worth £4587.52 (started it dec 2002).
What i might get at 15/09/2018 aged 60 if i continue as i am, estimated, = £26600.00
does that sound all right? hubby has company pension
p.s. have applied for a state pension forecast online