Pension for self-employed, or into an Isa?

NannyV

Hiya, I am a Self-Employed Childminder wondering where to put money each month which is intended for a Pension. At the moment I have only been putting away money for a few months and have about £400 to put in, and then monthly £60 until I go back to work as I am currently on maternity leave. This £60 a month is a priority but if I am out of work, then it will be put on the back burner until I am working again.

Currently it is just going into a Isa, as although I have read the information about pensions on here, I am still none the wiser of what it all means?

Any advice?

dunstonh

Currently it is just going into a Isa,

cash ISA or stocks and shares ISA?

What is your objective with this money? how old are you? what is your financial position both now and in future (i.e. retirement) if you keep the situation as it is? Does your spouse/partner have retirement provision? What is your overall savings position like?

NannyV

dunstonh wrote: »

cash ISA or stocks and shares ISA?

What is your objective with this money? how old are you? what is your financial position both now and in future (i.e. retirement) if you keep the situation as it is? Does your spouse/partner have retirement provision? What is your overall savings position like?

Its currently in a cash Isa, the objective is to have as a state pension boost if there is still a state pension when I retire! We have a mortgage on our house that will be paid off for retirement so ptentially could downsize to give a small cash boost, my partner has a pension plan where he pays in and also his work does, which is more much more than my pension but I cant remember the figure, its not a huge pension, probably an average as he has been doing this since he started work where as I havent.
Our overall savings is only just re-starting as we have put it all into the house a year ago, so currently we save £320 a month, £200 into general savings, £60 asside for my pension, and £60 asside for kids (driving lessons, school trips etc.)
If I can increase my savings when I return to work I willm but its quiet around here for work at the moment

jamesd

I suggest that you use investments within a stocks and shares ISA instead of investments within a pension for a year or three. That way you'll be able to get access to the money during the early part of building up your savings if something bad happens. Once you have a nice savings and S&S ISA pot built up to cover possible emergency needs that would be a better time to use a pension, I think.

You can use most of the same investments in a stocks and shares ISA as in a pension so you're not going to lose out from doing this, except the tax relief you can get later by moving the money from the ISA to the pension if you want to do that.

Don't be tempted to use the money to overpay on the mortgage, though. That only saves you the low mortgage interest rate, while it costs you the higher rate of return that you can expect from investments, leaving you worse off long term.

NannyV

jamesd wrote: »

I suggest that you use investments within a stocks and shares ISa=A instead of investments within a pension for a year or three. That way you'll be able to get access to the money during the early part of building up your savings if something bad happens. Once you have a nice savings and S&S ISA pot built up to cover possible emergency needs that would be a better time to use a pension, I think.

You can use most of the same investments in a stocks and shares ISA as in a pension so you're not going to lose out from doing this, except the tax relief you can get later by moving the money from the ISA to the pension if you want to do that.

Don't be tempted to use the money to overpay on the mortgage, though. That only saves you the low mortgage interest rate, while it costs you the higher rate of return that you can expect form investments, leaving you worse off long term.

Thank you, I will look into that, thanks for your help, will def. keep hold of it until we are back on our feet with savings