Personal Pension Options

mrsspendalot

Hi all

I have to admit to being a bit ignorant about pensions, so please keep it simple! But with pensions being in the news it makes you think about your own circumstances!

My husband left his job due to ill health in July 2009. He had worked for a council since 1998 and paid into a pension all that time. It is a final salary local government pension. He is 31 years old. For information, I currently pay into a local government pension too, but have only contibuted since June 2009 as previously I was a stay at home mum. I only work part time, so my contributions aren't huge. It too is a final salary scheme. I am 30.

Currently he is a student, wanting to train to become a teacher. However, he isn't going to be starting his PGCE until September 2013, so it is going to be summer of 2014 at the earliest before he starts working again, which is 5 years without paying into a pension or paying any NI contributions towards his state pension, and he is getting a bit concerned about the impact of this on retirement.

I've been looking at the possibility of paying into a personal pension for him in the time between now and when he starts work again, but don't really understand what I'm looking at, or what is a good option. I guess that when he starts working again he would transfer any personal pension he is paying into now to an occupational pension, and then he would also have his local government pension sat there too.

I've just had a look online at the Virgin Money pension and a Legal & General one. We haven't discussed how much we could pay into one, but I'm working on the assumption that anything is better than nothing!

Any advice?

CLAPTON

he only needs 30 years of NI contributions to get a full state pension

the maximum you can pay into a pension is the your yearly earnings (from employment ) or 2,880 (grossed up to 3600)

whether it's worth it depends upon your general financial situation
he will presumably be starting paying into a teachers pension soon so maybe you would be better to build up savings or invest in a S& ISA) ... but you don't really provide enough information.

kidmugsy

With 11 years accrued of LPGS pension, and the prospect of thirty or more years of Teachers' Pension to come, it doesn't sound as if it's urgent for him to open a personal pension. It might be wise to keep your powder dry.

mrsspendalot

Thanks for the advice.

I think because it is something he has always done, and sensibly so, that he is panicking over not having anything in place at the moment. I didn't feel it was so urgent whilst he retrains. I would far rather put the money into savings so we can build up a house deposit to be honest!

kidmugsy

A pleasure, but it was of course a 'comment' rather than "advice". If he frets you could always suggest that when he's a higher rate taxpayer he can make extra contributions and enjoy the bigger tax advantage then. And that's not "advice" either.

Loughton_Monkey

Personally, I would still (in his position) pay my maximum £2,880. I just cannot see it doing any harm. You can never have too much pension.....

But entirely up to him.