Got No Pension And Not A Clue Where To Start

missma

Hi All

Am twenty six years old and have not started to pay into a pension, do not really have a clue where to start. Am employed as a staff nurse in the private sector. Has anyone any ideas? I thought i had started paying into a pension with Scottish Widows four years ago with my previous employer, but as it turns out when i left i was given a cheque for nine months payments it having been never paid to them at all. How Much Would I Need To Pay In Monthly?

Missma

dunstonh

As a rough yardstick, you need to be contributing around 13% of your income at your age if you wish to retire at 65 without facing financial hardship. Whether you choose a pension or alternative investment plan would depend on your personal situation amongst other things.

The 13% is a rough figure because it really depends on what you will want in retirement.

Ken68

Sounds fishy,Missma...did you get an interest on the money and why wasn't it invested in a pension on your behalf......

........... I thought i had started paying into a pension with Scottish Widows four years ago with my previous employer, but as it turns out when i left i was given a cheque for nine months payments it having been never paid to them at all.

missma

No Got No Interest But Suppose Was My Own Fault, Was Pretty Naive. Not Got A Clue Now Who To Start With And So Many Advisors Linked To Companies.

dunstonh

Not Got A Clue Now Who To Start With And So Many Advisors Linked To Companies.

Well, dont see an advisor that is linked to any company. No-one would recommend that. You need to see an independent. https://www.unbiased.co.uk covers 90% of the UK IFAs. IFAs do not pay to be listed on that site (although some do pay for an "enhanced" profile). The site also doesnt get any remuneration or credit for referrals. You search by postcode (ignore qualifications filter as that is flawed and any IFA already has the right qualifications for what you want) and up come your nearest IFAs. You choose the one you want to deal with. Ideally, pick a small local firm and not a salesforce (no 08xxx tel numbers or addreses which are not local but appear under your postcode).

EdInvestor

I suggest you first apply for a forecast to see what you are already due to get from the 2 state pensions when you retire.

Apply here for a forecast

Private pensions are not a very good way to save for a basic rate taxpayer because they are very restrictive and you don't get much tax relief.

You might be better to save using ISAs at the moment - you can put away 7k a year, 3k in cash and 4k in investments.

Particularly if you haven't yet got a home and think you might want to use savings in future for a deposit , then don't put your money in a pension, because once it's in there, you can't get it out!

missma

Well currently have a mortgage on a property but it is only my first home, so don't think i will be here for ever! I take it therefore if I invested in an ISA (I have used these in the past), that the lump sum could then be paid into a pension.

dunstonh

generally, when we talk about ISAs for retirment planning, we are not talking about cash ISAs but equity ISAs.

missma

Right so what is the difference then with an equity one then?

EdInvestor

Just to clear up any confusion missma, a pension is just a way of accumulating a pot of money for retirement using tax relief, same as an ISA.
A house can also provide a pot of money for retirement these days.

The best ways of accumulating pots of retirement money if you are a basic rate taxpaper with no access to a company pension IMHO are as follows:

1)Save up (in a cash ISA where possible) for a deposit and then buy a house

2) Invest up to 7k a year in an investment (equity) maxi ISA.This tax wrapper is much less restrictive than a pension and will mean that all your retirement income is tax free

If you subsequently either become a higher rate taxpayer, or get a job where the employer provides a pension and puts in free money, then it is worth considering the pension tax wrapper for regular savings.

Othersie IMHO better to invest your money in the ISA.Exactly the same investment choice is available in both wrappers.

So next question: what do you want to invest your money in?

Try this asset allocation calculator for a few ideas.It's American but you should get the general idea.

mr_fishbulb

dunstonh wrote:

As a rough yardstick, you need to be contributing around 13% of your income at your age if you wish to retire at 65 without facing financial hardship.

Is that 13% of gross salary or 13% of take-home pay?