Pension Advice

Fifer73

Looking for some advice

I started a pension when i was 18, and whilst i was young free and single i had no trouble putting money into the pot.

I am now 36 years old

I have £10000 in my pension fund just now , I havent put anything in to my personal pension for over 6 years, Credit card debt ( now paid off )
divorce and buying my own place, and recently redundency have all been factors in stopping putting money aside.

I currently work 35 hours a week at just over the minimum wage ( not through choice ) No company pension availible.

Most of my wages do go out on mortgage and bills, I do however pay an aditional £100 a month for a mortgage overpayment.

Would it be best instead of putting the extra £100 towards paying off the mortgage earlier to put back to my pension fund ?
i know i am still at a shortfall with my pension as i think i should be putting something like £230 a month into it .

I want to take some responsibility for my pension years and want more than just the state pension ( if thats still availible )
It really does annoy me that some people dont bother with any sort of pension or savings and just expect the state to provide for them.

Any advice from anyone that does understand any of this would be really helppful.

Thank you

Lokolo

As long as you have enough NI contributions you can get state pension at your age. There is a website you can signup to and check. EdInvestor has the link and I can't be bothered to find it. He'll come on later.

You have this £100 overpayment. Why not reduce it to £50, then put £50 in pension, then you are doing both?

Do you have an emergency fund? If you lost this job what would you live on? (something else to consider)

Fifer73

Thanks for the advice , something i never considered and i would still be paying extra to the mortgage.

I have money in the isa, which is more than 3 months salary if the worse should happen again.

thanks

EdInvestor

You can get a state pension forecast here:

https://www.thepensionservice.gov.uk

Well worth checking, esxpecially if you have been contracted in to the 2nd state pension all along. Under the new S2P rules, lower earners will benefit from a higher pension when they retire.

dunstonh

Would it be best instead of putting the extra £100 towards paying off the mortgage earlier to put back to my pension fund ?

Will your mortgage pay you an income in retirement?

Clearing your mortgage early may be nice but it then leaves you with another shortfall and thats in your retirement provision and many people in that position then have to borrow on their mortgage again under equity release which just wipes out all the gain from clearing the mortgage.

Mortgage interest rates are low, investments are historically cheap and if you dont restart soon you will find it harder and harder to talk yourself into restarting your retirement provision because the amounts you will need will just become unaffordable.

Fifer73

Thanks for all the advice

I know that £100 a month is still not what i should be putting into the pension fund, as i think it should be around £230 mark

really apreaciate everyones comments

jamesd

Fifer73, the mortgage interest rate is lower than the growth rate of investments, so you get the most gain from investing in the pension.

It's quite a way away but one thing some people do to boost pension income and efficiently pay off some of a mortgage is take the 25% tax free cache from the pension when they are 55, or when the stock markets are next at a high point after that.

We're expecting higher inflation and one thing inflation is good for is reducing the real value of debts, as incomes rise with inflation or faster usually, while the debt stays the same, dropping in comparison to income. The pension investments tend to do better than inflation so they carry on increasing in real value, or at least fall less than the mortgage.

That inflation helping to pay off debts is another reason why it's better to do the pension first. Once inflation increases your income so you can hit the pension saving target you can start switching money to pay off more of the inflation-reduced mortgage if you like.

You might find the Hargreaves Lansdown pension calculator useful. If not married you'll probably want to use the advanced option to say that you won't need a pension for a spouse.