Advice needed

Gorge

I'm 31 and earn £9000 a year, just above minimum wage and no company pension. Live with parents. No debts, no savings. Set up Halifax regular saver, putting £250 month in there and then at start of next financial year will drop it into NS&I direct cash ISA. Not sure what to do about planning for retirement. Seems I need to be putting approx £120 month into stakeholder pension to catch up. So would it make more sense to put less into cash ISA to get decent pension? My other thought is stocks and shares ISA but I don't think I earn enough to take that risk and I don't know anything about stocks and shares. Saving for a house is out of my reach so I think I am right to put pension before saving for deposit. I'd be grateful for any advice offered, financial planning is not a strong point for me. Thank you.

EdInvestor

I would suggest you concentrate on accumulating a cash fund at present. You never know, you might find yourself with a partner in future and between you it may be possible to buy a home. So those cash savings could help towards a deposit.


Make sure your NI payments are up to date for the 2 state pensions. Get a forecast here on what you might get at retirement.The second state pension is being rearranged to benefit low earners, so it may be quite adequate for you.

In any case, investment in an ISA is better than a pension for a basic rate taxpayer.There is no difference between the investment skills required.

Gorge

Thank you Ed that sounds like solid advice. I really wasn't sure which way to go and now I do. Regards.

bristol_pilot

I think you should concentrate your efforts on getting a better job and improving your wage. On £9k, unless you are some kind of trainee and it will rise very rapidly in the future, there is no point in saving for a pension IMO. All you will do is end up with a very small pension in retirement that will most likely be deducted pound-for-pound from means-tested state benefits that you would otherwise receive.

glenbois

If you put money into a pension then you lose the access to the moneys you have invested until you are 55 - sure you get tax relief on the contribution you pay into it but with the new pension regulations you can get the tax relief at a later stage i.e. if at the age of 62 you have saved a shed load of dosh and want to put it into a pension then you will get tax relief at that time (subject to a maxmium - tax telief up to your current salary I believe - so circa £9k (assuming no salary increases before now and then ) when your 62 you could put another 9k when your 63 another 9k at 64 etc...)

In my mind pension planning has become a lot more easy to plan for with the new regulations for the average member of society due to huge increases in contribution allowances.

Save your money where you feel most comfortable and worry about pension planning closer to retirement in my view.

Gorge

Thank you Bristol Pilot and Glenbois for help. I've found it very useful and I'm happy to learn that I can forget about pensions for a while.