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

barneygumble

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

Am I right in thinking your partner is 57?

andymark1

No my partner is 47 years old

kidmugsy

An ISA freezes your income tax rate at what it is now - say 20% - but the pension exposes your future income to whatever tax rate is then extant. Which might be much higher than 20%. I'm a fan of pensions, but within limits. Those limits are that if you are not a higher rate taxpayer, if you are not getting an employer's contribution, and if you are a long way from pension-drawing age, be cautious. "3K then £125 each month" fits neatly into an S & S ISA.

jamesd

bendix wrote: »

Every day on this forum sees a new thread about wanting to sell their pensions or get a pension loan. THAT is why pensions are essential - people are financiall naieve and undisciplined.

Some people will, others won't. Better to give the financial facts and let people decide what to do based on their own knowledge of themselves. Personally I doubt that anyone who is tempted to spend is going to accumulate a meaningfully large ISA pot for retirement so they will have only the pension.

hugheskevi

For me, pensions are the main part of my retirement income provision, with ISAs/investments up to captial gains tax allowance filling the role of:

• providing liquidity/insurance - funds I wouldn't expect to need, and would not plan to use, but which are accessible in emergency (which I'd expect to be an unforeseen and prolonged reduction in income). Note, I'm not referring to general precautionary saving - that is in readily accessible deposit accounts, this is what I'd dip into after at least 6 months of zero income for whatever reason.
• smoothing out future income flows - and in particular to fund early-retirement, before various pensions come into payment
• providing a home en-route to a pension. I'm not going to put money into a pension without getting at least one of higher-rate tax relief, salary sacrifice or employer pension contribution. If I don't get any of those, the money can be parked in an ISA or be using capital gains allowance until such a time as one of those 3 things applies.

One thing I see quite frequently listed as an advantage of a pension is that in the event of unemployment it doesn't count against means-testing for benefits, unlike an ISA.

Personally, I think the exact opposite applies - if unemployment would cause me to fall back on means-tested benefits, I'd like to be able to access my money (as I'd have an urgent need of it!) so such a concern would make an ISA far more attractive due to its accessability.

property.advert

In an ideal world, we'd all fully fund ISAs, pay off the mortgage and stuff a pension full to the gizzards. The trouble is we don't live in that world, or most don't.

If you pay tax at 40% then pensions cannot really be beaten as you get an immediate 67% boost to your fund. Then you get back 25% tax free later. How you get income from your pension is also largely "up to you" these days.

ISAs sound great and hey, there is even an ISA season ! But for them to have maximum benefit you have to leave them untouched for donkeys and you can have the cash in your bank with a few clicks of a mouse or a telephone call. For most they are too easily liquidated and far fewer can benefit from them in full.

For most people, full ISA utilisation and adequate pension provision isn't an option on their salary whilst trying to raise a family and pay off a mortgage. At that level and after getting together some rainy day money, pensions are probably the best as it is, as Bendix eloquently puts it, free money !