Saving for my retirement

Better_Off_1983

Hi Everyone.

I am starting to save for my retirement, I am putting down £250.00 per month to start off with so far. I want to take early retirement and retire at 60 if possible. I have looked into a private pension and I have not got a clue where to start.

I have a high interest savings account, where, after the first anniversary -October, they will pay me 8% interest. When they pay that, I will have to close that account transfer the money and open another one if I want one.

I have an appointment with HSBC and I will be discussing a private pension with them next month.

Do you have a private pension? What did you do to get it started, how much are you paying into it?

I am 27 years old, female, no children

nearlyrich

Forget a bank for a private pension, does your employer offer a pension scheme? Will they contribute? The tax relief is worth a lot and helps the pension pot to grow. I started saving into a personal pension at 28 I have had two jobs (including the one I do now) where the employer contributes too, I am 50 later this year and I plan to at least semi retire at 55...I have a stash in ISAs too as I don't want to start taking from my pension pot too soo.

Loughton_Monkey

Better_Off_1983 wrote: »

Hi Everyone.

I am starting to save for my retirement, I am putting down £250.00 per month to start off with so far. I want to take early retirement and retire at 60 if possible. I have looked into a private pension and I have not got a clue where to start.

I have a high interest savings account, where, after the first anniversary -October, they will pay me 8% interest. When they pay that, I will have to close that account transfer the money and open another one if I want one.

This is presumably a First Direct Regular Saver. Yes, a very attractive product, but it will represent 'peanuts' for retirement which is 40 years down the road. You will receive around £96 interest after tax!

Using this savings account is not a bad idea, but ultimately the proceeds should be 'invested' into pension funds.

Better_Off_1983 wrote: »

I have an appointment with HSBC and I will be discussing a private pension with them next month.

Do you have a private pension? What did you do to get it started, how much are you paying into it?

I am 27 years old, female, no children

Most of us have private pensions. I would implore you not to go to a high street bank for one. You will regret it heavily later in life. They will 'sell' their very highly priced funds, which have historically demonstrated very bad performance, and the so-called 'Financial Advisor' will get a very large amount of commission - at your expense. Have you not ever read of the mis-selling debacles with banks over the years?

You should probably see an IFA to buy a pension.

At age 27, if you are planning to retire at 60 (before State Pension age) then 25% of your salary would be considered a decent amount if you had started at age 21. You should maybe think in terms of up to 30%.

coyocacan

It is great that you are thinking so positively about saving for retirement; but like others have said, please avoid high street banks as a port of call on this one.

There is loads of information on line about pensions, including private pension plan providers (e.g. Standard Life etc). But first of all, double check about what your employer offers - phone your HR department and ask for all information that they can provide you on the company's approach to employee pensions. Even if they contribute a very modest amount into an employee's pension fund - grab it.

birkee

nearlyrich wrote: »

Forget a bank for a private pension, does your employer offer a pension scheme? Will they contribute? The tax relief is worth a lot and helps the pension pot to grow. I started saving into a personal pension at 28 I have had two jobs (including the one I do now) where the employer contributes too, I am 50 later this year and I plan to at least semi retire at 55...I have a stash in ISAs too as I don't want to start taking from my pension pot too soo.

And when the company pension scheme crashes like mine did?

CLAPTON

birkee wrote: »

And when the company pension scheme crashes like mine did?

which one was that?

dunstonh

And when the company pension scheme crashes like mine did?

No money purchase company pension scheme has failed. For those in defined benefit occupational pension schemes there is protection in place for failures.

Do you have a private pension? What did you do to get it started, how much are you paying into it?

I started mine at 18. However, it doesnt matter what anyone else is paying in. What matters is what you want back and when and then a calculation can be made as to how much that will cost you per month.

You are 27 which isnt too late but you have already missed at least 7 good years. For example someone paying £100pm (indexed) from age 22 can end up with a pension of £10,307 p.a.in real terms. Delaying that to age 27 and paying £100pm (indexed) and the income figure drops to £8063 p.a. You have already lost nearly £2000 a year income by just 5 years delay on a small £100pm contribution.

An IFA can provide an analysis of what you need and what you should pay etc. You shouldnt use a sales rep at a bank.

birkee

CLAPTON wrote: »

which one was that?

Lucas / Yuasa Batteries
Taken over by different people to manage what WAS there, and having started my pension with the conditions at that time, (less than contracted for) have received notification that it is now likely to be reduced.

RichandJ

birkee wrote: »

Lucas / Yuasa Batteries
Taken over by different people to manage what WAS there, and having started my pension with the conditions at that time, (less than contracted for) have received notification that it is now likely to be reduced.

Lucas Yuasa is PPF\FAS, link below.

http://www.pensionprotectionfund.org.uk/FAS/Pages/Schemes.aspx?choice=L

birkee

RichandJ wrote: »

Lucas Yuasa is PPF\FAS, link below.

http://www.pensionprotectionfund.org.uk/FAS/Pages/Schemes.aspx?choice=L

Which tells me what?
Final salary pension scheme was cancelled before I retired, and now they say what I do get, is likely to be reduced again.

Don't forget the post saying 'pay into your employers scheme' to which I responded. Nothing to say the scheme will survive until retirement.

jamesd

It tells us:

1. That your point is irrelevant to Better_Off_1983, who is considering a personal money purchase pension. These have individual pension pots for each person. The individual making the contributions selects the investments and how to take an income whenever they are aged 55 or older. Income depends on amounts invested, investments selected and means used to take the income. These pensions are very like a stocks and shares ISA.

2. That your post is irrelevant to almost all private company workplace pension schemes, which today are almost always defined contribution schemes just like those in 1, with the employee owning the pot (though usually via a scheme trustee, for tax reasons). The employer is required to make the payments into the scheme each month and the pension scheme company is required to act if they are late, including reporting the failure to the pension regulator if necessary. Because these pots are completely independent of the employer it makes no difference at all if the employer becomes insolvent after making the payments.

3. That your scheme is a defined benefit scheme that wasn't protected by the Pension Protection Fund because it failed too early. So you're not entitled to the relatively high PPF guarantees. Instead you're covered under the Financial Assistance Scheme, which covers many older failed schemes.

4. That you've ample reason to be unhappy about your personal situation, which is a good example of why they are needed.