34 soon to be 35 year old & looking to start a pension!

andymark1

Hello There

Ok am really new to this so go gentle as am not very tech on this sort of thing so need the best advice please.

Ok am going to be 35 years old in May & have been working ever sense i left school at the age of 16,my partner suggested i get a pension lucky for her she starts using hers in 7 years time!! lucky women

So what would be the best place to start paying in my pension? i can place a small lump sum to start with say 3K then £125each month

Thanks again

dunstonh

So what would be the best place to start paying in my pension?

There is no one best pension. It depends on how you want to invest, what options and features you want and how you intend to buy it. Doing something is better than nothing but doing what is best for you is not really something anyone here can answer as we don't know anything about you.

i can place a small lump sum to start with say 3K then £125each month

Seeing as you are starting very late, is that sort of figure realistic for what you want?

Two rough guides here. 1 - aim to have £35k in a pension by age 35 (you are going to miss that) or 2 - if you have no existing provision, take your age and halve it and that is the percentage of your income that you should put into a pension.

Does your employer offer any pension schemes which they contribute to?

Loughton_Monkey

The majority of people use a pesnion provided by their employer. In the absence of which, you are basically on your own. An IFA can obviously help. But you can also go direct to many of the leading companies.

It is worth pointing out something that a lot of people don't understand - and that is that the ultimate value of your pension (based upon what you pay in) has a lot more to do with the funds you choose than the provider. Just as an example, I have lots of funds [in an ISA actually, not a pension, but that's ireelevant], but just one of many is "Aberdeen Asia Pacific".

If you went to Legal & General, just as an example, they could offer you a fund called L&G Aberdeen Asia Pacific. Basically the same fund. Just the charges are slightly different depending upon who you go through.

Your main issue, though, is that because you are starting late, you will probably need to put in quite a bit more than yo are suggesting in order to get a pension you will 'enjoy'. There is a very strong flavour of people (some on these boards) who have paid 'peanuts' into their pensions, and because they get 'peanuts X 1.9' out a few years later, seem to think they are getting ripped off. If you pay in roughly 25% of salary throughout working life, you'll usually get around 65% of your final salary.

bristol_pilot

Loughton_Monkey wrote: »

If you pay in roughly 25% of salary throughout working life, you'll usually get around 65% of your final salary.

Allthough I agree with this for anyone starting now, until fairly recently the most that could be paid into a pensiom was 15% of income. So people without an employer contribution were 'behind' from the outset.

Bigsmak

andymark1 wrote: »

Hello There

Ok am really new to this so go gentle as am not very tech on this sort of thing so need the best advice please.

Ok am going to be 35 years old in May & have been working ever sense i left school at the age of 16,my partner suggested i get a pension lucky for her she starts using hers in 7 years time!! lucky women

So what would be the best place to start paying in my pension? i can place a small lump sum to start with say 3K then £125each month

Thanks again

What age are you planning to retire at?

How much money would you need a month to live on?

DavidHayton

bristol_pilot wrote: »

Allthough I agree with this for anyone starting now, until fairly recently the most that could be paid into a pensiom was 15% of income. So people without an employer contribution were 'behind' from the outset.

This is true, to an extent. The old rules prevented you putting more than 15% of your income in a pension plan, but they did not prevent you saving more than 15% in other schemes: PEPs and ISAs come to mind.

In fact, if you are a basic rate tax payer now, but expect to be a higher rate tax payer in the future, there is wisdom in using ISAs now, and then transferring the money into a pension when higher rate tax strikes (then you get 40% tax relief on it).

David

bristol_pilot

DavidHayton wrote: »

In fact, if you are a basic rate tax payer now, but expect to be a higher rate tax payer in the future, there is wisdom in using ISAs now, and then transferring the money into a pension when higher rate tax strikes (then you get 40% tax relief on it).

This would have been great advice until the last budget but one, which has now limited contributins to pensions to £50k per annum from April 2011. So many people saving in an ISA and hoping to transfer to a pension later would be caught out by this. I don't think the returns on cash ISAs are high enough to justify doing this anyway and there is no point in saving in a S&S ISA if you are a basic rate taxpayer.

The government keeps changing its mind on pensions. They want us to save for retirement, but saving in a pension is not worthwhile unless there is (higher-rate) tax relief....so they give us tax relief and then...surprise surprise, a load of relatively well-off people are seen to be getting loads of tax relief.....so then they take some of the tax relief away again. One lesson from this - use whatever tax relief is available now and don't assume it will continue to be available in the future. I stuffed money into my pension between 'A-day' and April 2011 because I knew, I just knew, that the government would not let such a good thing go on for ever.

DavidHayton

bristol_pilot wrote: »

This would have been great advice until the last budget but one, which has now limited contributins to pensions to £50k per annum from April 2011. So many people saving in an ISA and hoping to transfer to a pension later would be caught out by this.

There is a carry-forward rule so you are allowed to carry forward £150k from the last three years (less anything that you have already used). So that should mitigate the problem that you describe.

bristol_pilot wrote: »

I don't think the returns on cash ISAs are high enough to justify doing this anyway and there is no point in saving in a S&S ISA if you are a basic rate taxpayer.

I agree with you on the first point: Cash ISAs are not for the long term. I would disagree with the second point, though. A S&S ISA saves paperwork and it should cost no more than a bare trading account.

However, the method would work equally well if you had used a bare trading account.

I can see your point, but the method is working well for me. Each year I transfer just enough money from non-pension savings into a SIPP to keep me below the 40% tax threshold. Will be even more important once the child benefit rules strike in 2013!

David

andymark1

Hello thank you for all the reply's have now taken on an ISA tax free account,then will do a pension

regards

bendix

andymark1 wrote: »

Hello thank you for all the reply's have now taken on an ISA tax free account,then will do a pension

regards

No no no no no no no!

It sounds to me you are doing the classic 'I'll do this small thing now, and that means I haven't got to do a pension until later."

It's not either / or. It's both.

Get a damn pension man. It's free money, and you're 35. You need it.

andymark1

Yes i am getting a pension,just set up a tax free account first before i miss out,& am talking to a independent adviser on the pension.