Pension Advice Needed

jimbo2010

Hi guys looking for some advice really. I'm 30 just had first baby and starting to think about a pension, i am unable to get a company pension as when i joined the company 4 years ago i opted out after first joining and company rules state you cannnot re opt in ( stupid i now know ).

What is the best option for me pension wise now, am looking to put in £60 - £70 a month.

yelf

based on those figures probably a stakeholder penion - but maybe also the aegon fpp

Cautious_Investor_3

Hi

Yes, you need to make provision for retirement, however this need must be seen in the context of a more rounded conversation about financial planning.

Saving for retirement is important, however so are other financial needs. For example you have just had a baby, have you thought about what would happen if you were ill and couldn't work or even worse die whilst your child is still dependent upon you?

Also, have you got an emergency fund in place, you know to pay for life's little financial crises!

Once you have addressed these then you can start to think about retirement planning. Try again to join your employer's scheme, see if they will change your mind, if then won't then I'm afraid you are on your own. Start by thinking about when you want to retire, look at what existing pensions will give you, complete a State Pension forecast (Google it) and work out what your shortfall is, you can then calculate how much you need to save. An IFA could be useful here but they will charge, although if you do want to arrange some protection for your family (life cover etc) you could ask the IFA to do this retirement planning work for the commission he will get from the protection.

IFAs will generally charge, however I've found a site where they will do retirement forecasting for free, they are called Investment Sense (Google them, they are at the .co.uk address).

I hope this helps, in summary, just change your thinking a bit, look at what may be a more immediate need first.

The Cautious Investor

gerry12

If you haven't saved then currently at 65 you would get your council tax paid and a pension credit probably worth about £3000 a year. this rises with inflation ( council tax goes up by more than inflation). £100,000 in a pension fund will give you £3750 pa ( rising annually as opposed to level) the £3750 would be taxed so effectively £3000 a year. As far as I can see anyone who saved a whopping £100,000 would have wasted their time.

dunstonh

based on those figures probably a stakeholder penion - but maybe also the aegon fpp

With a small contribution like that and no existing fund value, an IFA is unlikely to be able to get dispensation from Aegon to go below their published minimum premium. Typically they like to have the existing fund value above a certain amount or have a decent sized single premium made at the same time.

As far as I can see anyone who saved a whopping £100,000 would have wasted their time.

Only is you assume they are not getting any second state pension and want to live on or below the breadline.

That said, the OPs suggested monthly premium isnt very realistic for a 30 year old with no existing provision. Its more in line with what a 20 year old should be paying.

Cautious_Investor_3

dunstonh wrote: »

That said, the OPs suggested monthly premium isnt very realistic for a 30 year old with no existing provision. Its more in line with what a 20 year old should be paying.

Surely it depends on more than age.

I can see why age is important, but I would have thought the actual goals in retirement are more relevant.

I would have thought a back planning exercise, taking account of intended retirement age, desired income in retirement then deducting any existing provision e.g. state pension is the way to work out what level a person should be contributing.

Obviously contributions need to be affordable!

dunstonh

It is does depend on what you want but if you are going to make a small contribution then you do have to be wary that the amount you are paying may not be worth it and you may as well just stick to being poor in retirement but on benefits or spend your retirement working in B&Q.

There has to be a dose of realism with the level of contribution. £70pm for a 30 year old will produce around £3520 a year in today's terms. However, pension credits will produce around £2500 (big generalisation but not much else you can do at this stage). So, the OP would lose pension credits and the associated benefits that go with it and get just £1000 a year more.

Cautious_Investor_3

dunstonh wrote: »

There has to be a dose of realism with the level of contribution. £70pm for a 30 year old will produce around £3520 a year in today's terms. However, pension credits will produce around £2500 (big generalisation but not much else you can do at this stage). So, the OP would lose pension credits and the associated benefits that go with it and get just £1000 a year more.

Agreed, but you are therefore assuming pension credits etc will remain unchanged in 30 years time, are we sure they will remain unchanged in 30 days time?

Surely it is better to make your own provision in case pension credits no longer exist?

The Cautious Investor

yelf

dunstonh wrote: »

With a small contribution like that and no existing fund value, an IFA is unlikely to be able to get dispensation from Aegon to go below their published minimum premium.
.

True - i somehow thought tax relief would push ity over. clearly it doesnt come close. :wall:

rich010273

Cautious_Investor wrote: »

Agreed, but you are therefore assuming pension credits etc will remain unchanged in 30 years time, are we sure they will remain unchanged in 30 days time?

Surely it is better to make your own provision in case pension credits no longer exist?

The Cautious Investor

Make your own provision, yes, but not necessarily with a pension for the OP. You'd need more info on their circumstances.

A Basic Rate taxpayer would need to meet a minimum criteria to recommend a pension to?

Cautious_Investor_3

rich010273 wrote: »

A Basic Rate taxpayer would need to meet a minimum criteria to recommend a pension to?

I'm not sure what you mean here.