Students and Pensions

namfow

Hi there, student and keen moneysaver here. Forgive me if this is a really basic subject. (I signed up just to ask this question :P)

I've been reading up on pensions on this site and it seems the number one piece of advice is to start contributing as early as possible - however (unless I'm missing something!) it doesn't seem to mention much about students or people on low incomes.

I'm a student myself and I realise that most students probably wouldn't be in the right place for saving but I'm one of those lucky few who is actually in credit. I have a well paid PT job and with my student loan included I'm earning over £1000 every month, £500 of which is going straight into an ISA.

So I'm asking if I should start contributing now. The reason I ask is I understand my current yearly income of roughly £15000 is probably a fair bit below what I may be earning after I graduate, and whether it would be best to wait until I have settled into a career. Are people looking to invest in a pension advised to wait until they are in a steady career?

What do you think?

McKneff

I really think you are a bit young to be starting a pension TBH.
I would wait until youre settled, remember once this money is in the pension it ceases to belong to you and you cannot access it until
(under present legislation) you are 55 years of age.

Remember, there are things to come in your life that you will need finances for, wedding, mortgage, children etc. etc.
Im sure you will get more advice than this but I wish you good luck.

petrolhead89

McKneff wrote: »

I really think you are a bit young to be starting a pension TBH.
.

Rubbish - I'm 21 and have had a SIPP for 2 years. I too am a student and am working at the same time. Its never to early to start contributing.

Lokolo

Yes it is a good idea to start contributing early, but usually when you are that young it's best to look at other areas first. As McKneff says. House deposit, car, woman.

Low income shouldn't matter though, even on a low income contributions will still go towards good use.

I also assume you aren't planning on staying in the current company for at least a number of years, I wouldn't bother getting on the pension bandwagon. If you are planning on staying for a while, see what they offer.

McKneff

petrolhead89 wrote: »

Rubbish - I'm 21 and have had a SIPP for 2 years. I too am a student and am working at the same time. Its never to early to start contributing.

There really is no need to be rude. Your post really did not need the word 'rubbish' Its people like you who stop people trying to help.
You could go back and delete the word if you had some thing about you..

mmm, I can see youre a bit of a newbie, you need to read the forum rules.

dunstonh

A 27 year just starting a pension will get around 25% less income in retirement than a 21 year old just starting a pension using the same amounts. A 21 year old can afford to pay in a relatively small amount and benefit from it as well as keeping a relatively small amount contributed (in real terms) for the rest of their life. By the time you get to say 27, you are already suffering the cost of delay. Get into your 30s and you really feel it. Get to late 30s and £100pm saved will only provide around £100pm income in retirement in real terms.

If you can afford to start early then it can save you money in your later life at times when your budget is likely to be even more under pressure.

namfow

Lokolo wrote: »

I also assume you aren't planning on staying in the current company for at least a number of years, I wouldn't bother getting on the pension bandwagon. If you are planning on staying for a while, see what they offer.

Thanks for the advice - I wasn't really thinking of using the company pension sceme though, I'm sure there are much better deals to be had out there.

I'm 21 and currently living at home. Like I say I am already saving, quite a substantial amount for a student, I just am starting to wonder if it would be a good idea to start putting money somewhere where I can't just reach in at short notice and blow it on a TV?

Lokolo

namfow wrote: »

Thanks for the advice - I wasn't really thinking of using the company pension sceme though, I'm sure there are much better deals to be had out there.

I'm 21 and currently living at home. Like I say I am already saving, quite a substantial amount for a student, I just am starting to wonder if it would be a good idea to start putting money somewhere where I can't just reach in at short notice and blow it on a TV?

If you give us figures of how much you actually have.

For example, if you want a house deposit, you'll want around 20%, which will depend where you live. For me, I need £35k for this, which is quite a lot.

I fix part of my savings, and leave the other instant access.

If you want to contribute to pension, then go for it. But personally I would rather wait a couple of years, build up a house deposit instead. Then get in there. Companies are also being made to contribute to pensions in a couple of years (Ask the big D for more info).

McKneff

If you want to start a pension and a company pension scheme is on offer, grab it with both hands, why on earth would you say 'No thank you' to free money.
The company are paying money into your pension..........It really doesnt matter how long you are planning to stay with the company.

xrjtg

namfow wrote: »

Thanks for the advice - I wasn't really thinking of using the company pension sceme though, I'm sure there are much better deals to be had out there.

A large part of this depends on whether you would miss out on employer contirubtions by choosing not to join.

namfow wrote: »

I'm 21 and currently living at home. Like I say I am already saving, quite a substantial amount for a student, I just am starting to wonder if it would be a good idea to start putting money somewhere where I can't just reach in at short notice and blow it on a TV?

There's no point in locking up money for the sake of it if you have any sense at all (which it would appear that you do). The advantage of the pension wrapper is that it reduces the amount of income tax you pay now.

petrolhead89

McKneff wrote: »

There really is no need to be rude. Your post really did not need the word 'rubbish' Its people like you who stop people trying to help.
You could go back and delete the word if you had some thing about you..

mmm, I can see youre a bit of a newbie, you need to read the forum rules.

:T OK Boss!