I need a Pension!

terriblewithmoney

Hi all

New poster here!
I have been putting off getting a pension for way too long! I'm 27 and have never paid into any company pension since my jobs since leaving uni have been short-term contracts and I've always opted out (I know, I know!).

However, now I have my own limited company and really need to sort out a pension for myself, but don't know where to start since I'm both employer and employee!

Can anyone advise?
Thanks

tawl_2

http://www.pensionsadvisoryservice.org.uk/self-employed/private_pensions/

a good place to start and speak to an IFA for further details.

marklv

terriblewithmoney wrote: »

Hi all

New poster here!
I have been putting off getting a pension for way too long! I'm 27 and have never paid into any company pension since my jobs since leaving uni have been short-term contracts and I've always opted out (I know, I know!).

However, now I have my own limited company and really need to sort out a pension for myself, but don't know where to start since I'm both employer and employee!

Can anyone advise?
Thanks

I didn't start a pension until age 29 - you are not too old, so don't panic.

bendix

I didnt start one until four months ago., and despite that it will have over £200,000 by the time i finish paying into it in four years time.

And I'm 44.

(caveat . . . . .I concentrated on other savings vehicles first because I wanted flexibility of non-pension retirement savings in addition to a pension pot.)

You're never too old.

markelock

bendix wrote: »

I didnt start one until four months ago., and despite that it will have over £200,000 by the time i finish paying into it in four years time.

And I'm 44.

(caveat . . . . .I concentrated on other savings vehicles first because I wanted flexibility of non-pension retirement savings in addition to a pension pot.)

You're never too old.

how much are you investing every month?

bendix

markelock wrote: »

how much are you investing every month?

At the moment, £3785, which includes £1125 employer contribution. I'm planning to increase it every year as the pay packet grows.

My forecast is based on contributions only, and ignoring any capital growth.

marklv

bendix wrote: »

At the moment, £3785, which includes £1125 employer contribution. I'm planning to increase it every year as the pay packet grows.

My forecast is based on contributions only, and ignoring any capital growth.

WOW!!! You must be earning megabucks.

terriblewithmoney

bendix wrote: »

At the moment, £3785, which includes £1125 employer contribution. I'm planning to increase it every year as the pay packet grows.

My forecast is based on contributions only, and ignoring any capital growth.

Thanks for your input guys - was feeling better about it all until I saw your monthly contributions!!!ha. Appreciated

bendix

if you start at 27, you won't need to make large contributions. That's the whole point.

:-)

Aegis

terriblewithmoney wrote: »

Thanks for your input guys - was feeling better about it all until I saw your monthly contributions!!!ha. Appreciated

General rule of thumb is half the age you start your pension in percentage terms. That means 13.5% is about right for someone starting at 27. However, this is after tax relief, so before tax relief you can look at around 11% total. Obviously the overall result depends on the quality of your investments, but assuming a 7% annualised growth that would equate to a £400k+ pension pot for someone starting on £20k and saving 11%. In real terms (i.e.a allowing for estimated inflation) that's a pension pot of about £160k.

Starting lower and ending higher will mean that you need to pay comparatively more in later years to get the same effect, but with a rising income (hopefully we all have that to look forward to!) that might be more feasible.

marklv

So, basically, that formula would only generate a pension of around 40% of salary. Maybe it should be half your age + another 20% - i.e. 13.5% + 20% of that = 16.2% of salary.