Wanting to start a pension? No clue where to start

indierocker85

Hi guys

I am 23, and wanting to start a pension ASAP. I read on here, that you take the age you start and half it and thats the percentage you save. So for me as I am 23 its 11.5%. Does that mean that its a flat 11.5% for the rest of my life? Or does it increase as I get older?

Also, how do I start a pension? How do I pay into it? Is it safe?

I basically know nothing about them.
Argggh

Please help

dunstonh

I read on here, that you take the age you start and half it and thats the percentage you save.

Its a rough guide as a rule of thumb but it doesnt take into account how you will invest, when you want benefits and how you want benefits.

Does that mean that its a flat 11.5% for the rest of my life? Or does it increase as I get older?

You should increase your contributions annually to ensure a real terms benefit. You should also go up with pay rises above the normal increase (i.e. promotion).

Also, how do I start a pension?

find a local IFA who can explain it to you and recommend providers and investments to use to suit your objectives.

How do I pay into it?

direct debit is most common. Some employers offer one as well. If they pay into it then its worth using theirs.

Is it safe?

In itself there is no risk in a pension. How you invest will decide that. You can choose investments from across the risk spectrum.

JA1000

An IFA will relish such a young person setting up a pension, longer term = more commission. You need to work out what you can afford, aside from being able to live, buy a house etc.