Want to have a pension - where do I start?

SuzySu

At the moment I don't have a pension and not a lot of money to put towards one. However, I do realise the need to have a pension so can someone please point me in the right direction to get some information.

Is it something I can set up myself or am I best going through a financial advisor?

dunstonh

Is it something I can set up myself or am I best going through a financial advisor?

It is something you can set up yourself or you can use an FA or an IFA.

You should avoid using an FA if you need help but use an IFA. FAs are tied sales reps of the insurer (typically your banks nowadays). They operate a sales mentality, typically use lower quality products or more expensive plans. IFAs should be able to come in cheaper and/or better every time.

DIY is fine for you to do as long as you know what you are doing. i.e. you know what provider you want, you know how you want it invested and you know what type of pension (or Stocks & Shares ISA potentially) you want. DIY can save you money if you know what you are doing but like any DIY, if you dont know what you are doing it can end up costing you more in the long run if you dont do a good job of it.

What sort of amount are you looking to pay in each month? (that may help eliminate a number of pension types straight away)

SuzySu

I think I would make a complete hash of it if I did it myself tbh so thanks!

I really don't know what I could afford to put in....something around £50 or is that laughable? I'm 43 and a single mum so I'm completely on my own with this. I only worked for about 2 years before having my family so only a miniscule amount in a frozen pension (Standard Life) from around 1991ish.

jamesd

First stop is to get a State Pension Forecast so you can see what you can expect from the two state pensions.

Then decide how much income you want when retired. Subtract the state pensions from that to get the target for pensions from jobs or your own contributions. Then try using the Hargreaves Lansdown Pension Calculator to work out how much you should put in each month to try to reach that target. Use the personal contribution p.m. (per month) box. Your actual contribution would be that times 0.8 if you're a basic rate tax payer.

SuzySu

Blimey.....that's one confusing site!

Could only find one pension on the direct.gov site but had a look at that. The Hargreaves site is a bit easier though. It's definitely reinforced my opinion that I need some proper help with this.

dunstonh

£50 is a bit light but then you qualify the reasons for that. It is actually possible that a pension could do more damage than good. i.e. you could put aside just enough to find you have taken yourself out of pension credits and got no real benefit for doing so.

That said, if your state pensions qualification is good then a small pension on top may be just what you need. So getting yourself a forecast is a good idea.

jem16

SuzySu wrote: »

Blimey.....that's one confusing site!

Could only find one pension on the direct.gov site but had a look at that.

The idea was for you to obtain a forecast of your state pension entitlement so you could work out how much extra you want to have in retirement.

You can get a forecast online from here;

https://secure.thepensionservice.gov.uk/statepensionforecast/

DiggerUK

SuzySu wrote: »

.......I do realise the need to have a pension......
.......Is it something I can set up myself or am I best going through a financial advisor?

Not if you are talking about a private/personal pension. If it is a final salary pension you have access to, then fine, otherwise leave well alone. As you can see right now, you may take a hell of a financial beating, and as you cannot get access to the funds in a pension until 20? 30? 40? years, why take the risk.

If you cannot get access to a final salary scheme, then all you need to do is work out a savings regime to ensure you have funds in retirement.
You don't need to pay a financial advisor for that, when half an ounce of common sense, and a bit of research will enable you to do it yourself.
Plenty of advice to help you on the "Saving and Investment Board".

Best of fortune.

jem16

DiggerUK wrote: »

If you cannot get access to a final salary scheme, then all you need to do is work out a savings regime to ensure you have funds in retirement.

Cash over the long term for retirement purposes will never fit the bill. You are just opening yourself up to inflation risk.

DiggerUK

jem16 wrote: »

Cash over the long term for retirement purposes will never fit the bill. You are just opening yourself up to inflation risk.

At times cash savings accounts will stay ahead of inflation, not at present, but over 20 to 40 years there will be periods when they will be appropriate.
National Savings Index Linked Saving Certificates are also excellent, though sadly suspended for now.

Cash is not the only game in town anyway.

bendix

DiggerUK wrote: »

Not if you are talking about a private/personal pension. If it is a final salary pension you have access to, then fine, otherwise leave well alone. As you can see right now, you may take a hell of a financial beating, and as you cannot get access to the funds in a pension until 20? 30? 40? years, why take the risk.

If you cannot get access to a final salary scheme, then all you need to do is work out a savings regime to ensure you have funds in retirement.
You don't need to pay a financial advisor for that, when half an ounce of common sense, and a bit of research will enable you to do it yourself.
Plenty of advice to help you on the "Saving and Investment Board".

Best of fortune.

More nonsense from Digger. And dangerous nonsense too.

What about those who pay 40-50% income tax and get that as a break. I get a contribution of around £1200 per month free money from my employer, plus nearly £200 per month NI refund through salary sacrifice. Should I forgo that?

As for taking a beating . . nonsense. My pension investments have performed incredibly well in the last twelve months, thank you very much.