Start a Pension or Long-term Savings?

tom-i

Morning all,

I'm 21 and have been working full-time for about 3 years. I havn't yet started a Pension and only lately have I started to think about doing one.

I'm already saving money every month into my 3% Cash ISA with Halifax, but I don't consider this long-term savings. It could be used possibly next year to go travelling, or if that fails it may become part of a house deposit (in a few years).

I'm after some advice regarding Pensions and Long-term Saving plans (I'm thinking maybe 10 years+) if anyone can shed some light on advantages/disadvantages on both I would really appreciate it.

sympatex

tom-i wrote: »

Morning all,

I'm 21 and have been working full-time for about 3 years. I havn't yet started a Pension and only lately have I started to think about doing one.

I'm already saving money every month into my 3% Cash ISA with Halifax, but I don't consider this long-term savings. It could be used possibly next year to go travelling, or if that fails it may become part of a house deposit (in a few years).

I'm after some advice regarding Pensions and Long-term Saving plans (I'm thinking maybe 10 years+) if anyone can shed some light on advantages/disadvantages on both I would really appreciate it.

I don't think anyone can give 'advice' but can offer opinions! technicality! board rules and so on.

my opinion on pensions is that if you don't have a company scheme where they pay into it aswell as you, or, unless you're a higher rate tax payer the benefit is marignalised compared to alternatives available. I think private schemes are a bit of a crock due to excessive fee's. To avoid that, you probably need to look at a SIPP which is a self invested pension, not disimilar to a S&S ISA in they way you would operate it.
You invest, you choose the funds, "pay your money and you take your chances" style.

Cash ISA is a funny beast, the benefits of it long time are very tempting, very flexible, you can have immediate access (usually) without penalty, and there is no tax (been taxed already when you earnt the money you've paid in), and on the morbid side, if you die the whole lot will be given to your spouse / family. Pension fails here to some extent. However, cash in the long term will invariably perform less favourably to the stock market (where you pension and S&S ISA would be)

I would focus on cash for now, if you go travelling you dont know what you might need in terms of £s. enjoy it, you won't get another opportunity to just trog around the world until you're practically dead given the current governments retirement plans.

If you're going to use it as a house deposit then you're going to need as much as you can and the pension money will obviously be inaccessible.

jem16

sympatex wrote: »

I think private schemes are a bit of a crock due to excessive fee's. To avoid that, you probably need to look at a SIPP which is a self invested pension, not disimilar to a S&S ISA in they way you would operate it.

A SIPP can be more expensive than a personal pension if only using funds as most would do.

sympatex

jem16 wrote: »

A SIPP can be more expensive than a personal pension if only using funds as most would do.

Don't trackers keep the costs down? Just adds to the complication of pensions which is another reason to deter people.

jem16

sympatex wrote: »

Don't trackers keep the costs down?

You can have trackers in a personal pension too.

However you have to decide where and when to use trackers - your choice shouldn't all be about cost.

Just adds to the complication of pensions which is another reason to deter people.

What does?

jem16

tom-i wrote: »

Morning all,

I'm 21 and have been working full-time for about 3 years. I havn't yet started a Pension and only lately have I started to think about doing one.

Do you have access to a pension through work? Does your employer contribute?

tom-i

Thanks for the info.

Yes sorry I forgot to mention we do have a Pension scheme at work, I havn't had a chance to talk it over with my manager so I don't yet know any details.

I think this should really be my first step towards deciding.

dunstonh

I'm after some advice regarding Pensions and Long-term Saving plans (I'm thinking maybe 10 years+) if anyone can shed some light on
advantages/disadvantages on both I would really appreciate it.

Obvious stand out there is that one is for 10 years or so whilst the other is for 40 odd years. Totally different objectives.

Don't trackers keep the costs down? Just adds to the complication of pensions which is another reason to deter people.

If anyone is using that as an excuse for not using pension is just making up silly reasons to make themselves feel better for not retirement planning. The same investments for ISAs exist on pensions at the same cost. The tax wrapper makes no difference. However, pensions can offer lower cost options in some areas. SIPPs are generally aimed at those with higher values wanting to use direct investments. Using them for funds only can be more expensive.

jem16

tom-i wrote: »

Thanks for the info.

Yes sorry I forgot to mention we do have a Pension scheme at work, I havn't had a chance to talk it over with my manager so I don't yet know any details.

I think this should really be my first step towards deciding.

Yes it should as your employer may also be contributing or it may even be a final salary - where do you work?

kidmugsy

"until you're practically dead given the current governments retirement plans": which differ very little from the previous government's, so don't expect any new government to offer retirement for all at 55, funded by the tooth fairy.

tom-i

dunstonh wrote: »

Obvious stand out there is that one is for 10 years or so whilst the other is for 40 odd years. Totally different objectives.

Yeah true I realise that. My thought was to continually invest in long-term plans until retirement. Whilst I said 10+ years, this could also be 25+ etc. - I wasn't sure on the best method

jem16 wrote: »

Yes it should as your employer may also be contributing or it may even be a final salary - where do you work?

I work for a local Music equipment reseller, I'm sure I've been told before they contribute towards.

Thanks