Pension MoneySaving: Buy a different way to boost returns Article Discussion Area

Faz1912

Hello,
I am just looking for some advice on private pensions and if it worth me getting one at the moment. I have just started a new job after returning from travelling and I am planning to go travelling again next year. I am 25 and currently only pay NI in regards to any kind of pension. However one of the ladies at work mentioned that I probably should be paying into a private pension now and if she had started at my age, she probably would have been able to retire now (she is around 50, although I am aware other factors will affect her ability to retire early, especially as the economic world is a very different place today).

The thing is I am also planning on eventually emigrating to Australia for good before I am 30 and so I am wondering if it is worth me setting up a private pension in the UK, in case I will not get any benefit from it once I have moved or if I cannot get my money back out of it when I have moved.

I am not sure if I am worrying unecessarily or if I should start setting something up for the future as I also keep hearing horror stories about my generation probably never being able to retire and state pensions disappearing by the time I will be the age to claim one.

I would be grateful if anyone could advise me on this so I can take any action if needed, even if it is just the kind of person I should talk to about this as I really don't know where to start with all of this but I don't want to brush it under the carpet and suffer as a result later.

PS. Sorry if I have put this in the wrong place but I was looking private pension advice just in case, when I thought asking the specific question was probably the best idea.

Thank you in advance for your time and help

stphnstevey

If my salary is £5720, can I make a pyment of £5720 to a personal pension and the goverment will add tax reelief or is it £4461 and the goverment makes it upto £5720 with tax relief?

Paul_Herring

stphnstevey wrote: »

If my salary is £5720, can I make a pyment of £5720 to a personal pension and the goverment will add tax reelief or is it £4461 and the goverment makes it upto £5720 with tax relief?

The latter.

serendipity2706

I'm trying to help my friend locate her exhusband's Standard Life pensions, which were to be shared with her when they paid out, as a condition of the divorce. She doesn't have any documentation and needs an address to write to. Have searched all over the internet but all we find are phone numbers, or online registration which are no use as they were in his name. Does any one have any relevant addresses?
Many thanks

Amanita_2

From the Standard Life website

Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Telephone +44 (0)131 225 2552

dogbreaths

Hi people,
Just wondered if a stakeholder is right for me? No debt, ISA is maxxed out and have enough ready cash for rainy days. I have a work pension, which as I am in the forces is all done for me. I am off overseas so won't be able to spend much on anything else so have some money to invest, probably for about 15 years at about £300 a month. After reading all the comments, well most of them, i am just a bit confused as whether they are worth it and what to invest in. Most of my other money is safeish so don't mind a bit of a punt!

Elnafinn

I have just reached 60 and a personal pension fund has "matured"
I have another fund that runs until I am 65
The £200 a month that I was paying into the "matured" fund I was considering paying into the other live fund
As I am intending to retire at 65 would this be a good idea or would I be better of putting it in ISAs
Over 5 years that would be £12000 I would be putting in but I would have to live an awfully long while to get that back with the current annuity rates
I am a 40% tax payer
Any thought will be appreciated

dunstonh

Most pensions dont need to be matured at the selected retirement age. You can defer them to a later age. The selected age is usually just an indication for the insurer to use when providing illustrations of benefits and when to send you the paperwork. There are some that are best maturing at the selected age (guarantees or some section 32 buy out bonds etc) but dont take it for granted that you need to do it.

Harry_Powell

As a higher rate taxpayer you're receiving 40% tax relief on contributions into your pension and will pay 20% tax on your pension income when you retire. That alone would make me continue putting money into a pension plan.

Aegis

Elnafinn wrote: »

I have just reached 60 and a personal pension fund has "matured"
I have another fund that runs until I am 65
The £200 a month that I was paying into the "matured" fund I was considering paying into the other live fund
As I am intending to retire at 65 would this be a good idea or would I be better of putting it in ISAs
Over 5 years that would be £12000 I would be putting in but I would have to live an awfully long while to get that back with the current annuity rates
I am a 40% tax payer
Any thought will be appreciated

Assuming you can get full higher rate tax relief, think of it this way:

Contributions:
Your total contributions: £12,000
(Total added to pot after tax relief: £15,000)
Net contribution: £12,000

Returns:
Tax rebate:
£3,000 (you receive this relatively soon after making your contribution, so it could be seen as a deduction from the contributions, but I'm including it in the returns for this example)
Pension Commencement Lump Sum (assuming no growth):
£3,750
Pension pot remaining for annuity purchase or unsecured drawdown (assuming no growth):
£11,250

Final returns (assuming you manage to get 50% of your pot out): £12,375 (£375 growth)
Final returns (assuming you manage to get 75% of your pot out): £15,188 (£3,188 growth)
Final returns (assuming you manage to get 100% of your pot out): £18,000 (£6,000 growth)

All returns are shown assuming that there is no investment growth at all within your pension. My own view is that when £9,000 can buy you £15,000 worth of pension pot in 5 years if you leave it purely in a 0% cash account, it's a pretty easy decision unless I need the money right now. Do note that your individual tax position on retirement will also affect these figures.

If you get some growth on these figures, then the returns will be better, but if you plan to buy an annuity at the retirement point you should probably stick to very cautious investments. If, on the other hand, you plan to use unsecured drawdown to live on or to delay taking your pension, then you might consider some longer-term income-generating assets, in which case the potential for growth (and short term loss too) is higher.

If you want to keep full control over what you spend and when, then it might be better off keeping the money out of the wrapper.

If in doubt, chat to an IFA about these options, as pension planning is a very personal choice and should ideally not be made without professional assistance. Getting a good IFA now will also save you time if you decide to buy an annuity in 5 years, as an IFA will have access to far more products than most pension providers will offer you.