26 year old - private pension?

adonis10

Ok, I've never been in a position to pay into one due to Uni etc. Now I've been working for 3 years, it's probably an idea to think about it as I'm sure the state pension will be either be neglible or non existent in 40 years.

Brief overview of situation:
- 18.5k salary (trainee accountant so this should be 25k in 12-18months)
- Debt: - £200 credit card and overdraft
£18k student loan
- Savings - £10,000
- Mortgage? - yuh right, on 18.5k in this day and age! Doubt I'll have one before 30.

I know nothing about pensions, never had to. Trying to save as much as I can whilst paying off credit card at the moment.

Any advice appreciated!

coldstreamalways

Why will your student loan never be paid off? Is it through SLC? Surely even making the small payments that are automatic, it will be done by the time you are 50?
Mine was 30k:eek: Only about a year left now though thank goodness. Since I've never had the money, I don't miss it but I'm blimmin well looking forward to having it.

adonis10

coldstreamalways wrote: »

Why will your student loan never be paid off? Is it through SLC? Surely even making the small payments that are automatic, it will be done by the time you are 50?
Mine was 30k:eek: Only about a year left now though thank goodness. Since I've never had the money, I don't miss it but I'm blimmin well looking forward to having it.

Well, I currently pay off £300-320 a year, and the interest will be a good £400 (was £800) a year or two back, so until I earn a proper wage it'll be steadily increasing. I don't envisage earning more than 30k/year so even then it'd be £1350 less interest, say £700, which would be about 28 years! I certainly won't be on 30k for a long time.

I took mine out before the new tuition fees came in so mine gets written off at 65, as opposed to 50 if you took it out after. Grr!

Like you, I don't miss it as I am just used to getting 60% (after 20% tax, 11% NI, 9% SL) of my wage and have done ever since I started working.

Financially, it was an horrendous decision (3 years out of uni, earning 18.5k) but meh, I'll be working for another 40 years so I'm not too bothered.

adonis10

Any thoughts on original question, ie. pension?

magicdogsbrain

Does your employer offer any kind of pension? Best to start there. If not, then there are a few options.

Probably the best option for you would be to start a stakeholder pension with L&G or Scottish widows or whoever.

Have a play with this tool to work out how much you should be contributing....

http://www.h-l.co.uk/pensions/interactive-calculators/pension-calculator

jem16

magicdogsbrain wrote: »

Probably the best option for you would be to start a stakeholder pension with L&G or Scottish widows or whoever.

I agree about contributing to the works pension if the employer also contributes or if it is a final salary pension.

However, depending on amount OP plans to contribute, a multi-charged personal pension would give much better choices of funds and probably be cheaper in the long term given his age now.

ojk1184

Hi Adonis10

Your employer is obliged by law to have a pension scheme in place, though some employers are exempt, you can look at the pension advisory service website for further details.

They usually pay a minimum percentage into your pension but often your employer will match your contributions up to a certain amount, usually around 3%.

So if you contribute 3% of your salary, your company will also contribute 3% of your salary into a scheme, totalling 6% of your gross salary per annum.

Also on another note, you can get a joint mortgage with a partner (if you have one) on 18.5k per annum. Lenders will usually lend 3.5 - 4 times your combined salary so it is possible if you do want to settle down!

jem16

ojk1184 wrote: »

Your employer is obliged by law to have a pension scheme in place,

This rule no longer exists.

http://forums.moneysavingexpert.com/showpost.html?p=34618387&postcount=9

CLAPTON

It makes no sense to have savings earning say 2-3% if you have debts costing much more so (unless they are interest free) pay off the CC and OD.
again unless its 0% interest don't use you OD regularly as this is often seen as being in financail difficulty

Unless your employer contributes to a pension then I would suggest you concentrate on saving for a mortgage deposit as yout top financial priority at least for the next year or so.

currently interest rate on the SLC loan is 0% although this will go up in september

adonis10

ojk1184 wrote: »

Hi Adonis10

Your employer is obliged by law to have a pension scheme in place, though some employers are exempt, you can look at the pension advisory service website for further details.

They usually pay a minimum percentage into your pension but often your employer will match your contributions up to a certain amount, usually around 3%.

So if you contribute 3% of your salary, your company will also contribute 3% of your salary into a scheme, totalling 6% of your gross salary per annum.

Also on another note, you can get a joint mortgage with a partner (if you have one) on 18.5k per annum. Lenders will usually lend 3.5 - 4 times your combined salary so it is possible if you do want to settle down!

Thanks for the info.

Re the employer pension. I despise my current employment and hope to be out within 6 months so I'll be leaving that until I am somewhere more suitable.

I don't have a partner so it's not an option. No problem though as I don't want to settle down before I'm 30 anyway.

adonis10

CLAPTON wrote: »

It makes no sense to have savings earning say 2-3% if you have debts costing much more so (unless they are interest free) pay off the CC and OD.
again unless its 0% interest don't use you OD regularly as this is often seen as being in financail difficulty

Unless your employer contributes to a pension then I would suggest you concentrate on saving for a mortgage deposit as yout top financial priority at least for the next year or so.

currently interest rate on the SLC loan is 0% although this will go up in september

Yeah, I saw sense with the OD and CC thing. Had £250 and £950 respectively, and £11,000 savings. It's the psychological thing of just transferring £1,000 out of one account and into a black hole. I got over it though and the remaining couple of hundred will be cleared on payday.

Student loan - I've given up on caring about this. One year I got raped completely with circa £800 interest, so this 0% year is a god send. Happy to pay off the standard 9% over 15k, and as my income goes up the amount will start to override the amount of interest (assuming inflation doesn't go through the roof) which will be nice psychologically, even if it only knocks off a couple hundred a year!