Starting a personal pension

Bazzone

Hi all,

I'm finally starting to take pensions seriously at the ripe age of 35. I have nothing at the moment and would like to start investing £100pm (+ tax ben). I've been looking into sipps and quite like the look of the Hargreaves Lansdown SIPP. What I'd really like to know is are SIPPs ideal for all sorts of investments? i.e small amounts of money and large amounts? Since I don't have a large lump sum or large monthly contribution to invest I was just wondering if SIPPs are for me?

I have a little experience in dealing in funds through both my daughters CTFs (F & C) and quite enjoy the risk!

Thanks and go gently!

dunstonh

I'm finally starting to take pensions seriously at the ripe age of 35.

ok you have some catching up to do. The old saying of aiming to have £35k in a pension by age 35 is unrealistic for you.

I have nothing at the moment and would like to start investing £100pm (+ tax ben).

Is £100pm a realistic amount given how late you are starting? Indeed, £100pm is the minimum contribution of many personal pensions nowadays.

What I'd really like to know is are SIPPs ideal for all sorts of investments? i.e small amounts of money and large amounts?

SIPPs are typically for larger investors who wish to have access to investments that are typically not available within personal pensions or stakeholders. SIPPs are designed for the experienced investor. They can end up being expensive for the inexperienced, lazy investor.

Bazzone

Thanks! £100pm is very realistic as it's what I can afford. Everyone keeps telling me it's best to start one as early as possible with as much as you can afford. For now that's £100pm. I'm not really starting off with the thought that I need £35k pa when I retire because in this moment in time I couldn't afford it. But I guess it's best to start somewhere no?

I was getting that feeling about SIPPs, even though non of the providers say it. What type of pension should I be looking at if SIPPs are not for me?

Thanks

Bazzone

Looking around on other threads I think I've decided to go with a stakeholder pension via Cavendish. Not sure which one yet. Would I be able to transfer this easily at a later stage to a SIPP without massive charges?

dunstonh

Would I be able to transfer this easily at a later stage to a SIPP without massive charges?

That would depend on the SIPP provider. The stakeholder doesnt matter as you have stakeholder rules.

Mols

I'm 37 and only started my Pension in January this year!

I have been meaning to start one for years, but have been waiting to find the time to learn about what I was doing before starting one!

I never found the time so I booked an appointment at my bank and started one with HSBC. It's not the right product for me but it got me started.

I 'interviewed' a number of local IFA's last month, chose one I thought I could work best with, have had two meetings with them and am now in the process of moving the HSBC pension to something that is right for me and will hopefully perform in the way I need it to for my future.

It's never too late to start and in my very limited experience it's better to get started with something as it can always be changed or modified later.

bendix

dunstonh wrote: »

ok you have some catching up to do. The old saying of aiming to have £35k in a pension by age 35 is unrealistic for you.

I've always wondered about this, dunstonh. Is it just the 35k at 35 that is used as a dictum or does it equate to 45k at 45 etc etc?

Because that would then imply . . . well, you know where I'm going.

Rich1976

I don't know of any 35 year olds that have pension funds of 35k or more so I don't know how that statement can be true. Most people I know who earn less than 20k don't have any sort of pension fund let alone one of that amount.

As for the amount of £100 only being small well its better than nothing. We don't know what other epenses they have. Not everyone is well paid enough to pay in hundreds of pounds each month. Like everyone else they have daily life to manage and ever increasing bills to fork out for which then reduces the amount that can be paid towards other things including a pension. And once you've paid into a pension you can't get it back until at least 65 so its best not to throw too much into it.

dunstonh

I've always wondered about this, dunstonh. Is it just the 35k at 35 that is used as a dictum or does it equate to 45k at 45 etc etc?

Because that would then imply . . . well, you know where I'm going.

It would be nice if it was. It would mean it got easier as you got older.

I don't know of any 35 year olds that have pension funds of 35k or more so I don't know how that statement can be true. Most people I know who earn less than 20k don't have any sort of pension fund let alone one of that amount.

Its an aim not a must have. However, most people that have been in occupational schemes since their early to mid 20s could be there. As will those that started a decent contribution level.

£100pm net (of basic rate) from the age of 20 until age 35 @7% p.a. growth = £39,108

£20pm net for a child from birth to age 35 @ 7% p.a. = £34,421

So,its not difficult.

As for the amount of £100 only being small well its better than nothing.

it is. However, when you leave it late you need to be prepared to put more in later on to make up for those years you havent paid in.

Not everyone is well paid enough to pay in hundreds of pounds each month.

Contributions are generally relative to earnings. The more you earn, the more you want (or should) put aside.

Like everyone else they have daily life to manage and ever increasing bills to fork out for which then reduces the amount that can be paid towards other things including a pension

(generalisation alert) But in the consumer society that has grown up over the last 10-15 years, the priorities have changed to "must have now". Many spend more on their sky subscription than they do their retirement planning. Or even more at Mcdonalds each month.

One of the biggest problems with pension contributions is the unrealistic expectation people have of how much they will get back to how much they are paying. We see it time and again on these forums and it occurs in the real world frequently.

At age 20, £100pm is a good contribution. At age 35 it is not (without past provision). If you added in indexation to pump it up over the years and cover inflation plus a bit more then you can get away with it. If you do £100pm level though then you are just asking to be disappointed when you retire.

And once you've paid into a pension you can't get it back until at least 65 so its best not to throw too much into it.

Ignoring the fact its 55 as a minimum, isnt that the whole point of retirement planning?

MGCP

I wish mine was growing by 7% p/a. Over the last few years it seems to be worth only slightly more than has been paid into it!