Age to start paying into a pension?

Nine_Lives

This is all an interesting read, but one thing which concerns me is this...

People tend to pay a % of their annual wage into a pension [the exact figure of that % is irrelevant at the moment].
I get the impression (not from this thread alone) that most folk seem to get some sort of pay rise each year ... and this is where my concern lays.

I'm a low earner. Last year i got 18.5k gross, however 4.5k of this was overtime, therefore it's not guaranteed & this year we're having our hours cut.
My last pay rise was 2007 (if i remember right), and the one before this would've been about 2004 at a guess. The pay rise we received in 2007 equated to 10p per hour for the first 40 hours. Overtime rate (after 40hours) increased slightly more but i mean SLIGHTLY.

So basically in the past 7 years we've had ONE pay rise of 10p per hour. It's a no brainer that each year we're effectively having a pay reduction. We've asked for a rise, but just get told we're lucky to have a job, by the directors who pocket themselves 300k BONUS per year each.

So i pay x-% into a pension now for e.g. well i simply can't afford to raise that % next year and the year after, so on & so forth, because i'm getting no pay rise.

And the company i work for also don't contribute either.

I plan on seeing an I.F.A. about this as i need to talk to someone who knows about this area, but in the mean time, i just worry that i simply can't afford anything worth while (i should've added that on top of all this we'll be due to move out & get our own place next year too).

gadgetmind

K_P83 wrote: »

So i pay x-% into a pension now for e.g. well i simply can't afford to raise that % next year and the year after, so on & so forth, because i'm getting no pay rise.

There's no obligation to keep increasing what you pay.

However, paying into a pension *is* a big issue for anyone not yet earning a good wage, at least partly because anything from your own pension will eat into future benefits. This is why HMG are considering the flat rate pension.

Regards seeing an IFA, you may find that it's hard to find someone to advise for a small pension, particularly post the RDR changes. However, starting a stakeholder pension is just a matter of a few simple forms, and you only need to put £16 a month in, which HMG make up to £20 for you. OK, this won't get you a massive pension, but at least you'll have something running, and you can increase payments as and when you choose.

atush

Age 18 is a great time to start a pension. but get him to build up some cash savings too, for emergencies.

And our mother age 50 should start one if she doesn't have one (esp if she still works and pays tax). If not, as long as she saves elsewhere into ISAs that will help.

atush

So i pay x-% into a pension now for e.g. well i simply can't afford to raise that % next year and the year after, so on & so forth, because i'm getting no pay rise.

And the company i work for also don't contribute either.

It is my understanding that htey will have to in a fwe years time by law. So that should boost things for you.

If you can't afford to raise yours, just go on paying what you are. It is better than not paying in.

Nine_Lives

While i'm on a low earn, i don't think i do too bad at the moment as far as saving goes. I think last year i had 18.5 gross, but i was able to save about 6/6.5k in cash and this is simply because i don't go spending-silly (though i did splash 1.5k building myself a PC, just because i had wanted to for some time). I don't go boozing every night (or even every weekend tbh). I know i'm living with the folks at the moment, so that helps an immense amount, but even still, i was able to save without really much effort.
What i'm getting at there, is that if i can save on this low earn, i could hopefully pay an ok amount into a pension on a low earn. This would obviously all get thrown up in the air when we get our own place & that's the real time when we'll be able to see how much we can save.

You can tell how green i am to all of this when i'm asking who are HMG and what is this flat rate pension, as well as RDR change?


I get the impression you would advise against seeing an IFA as you seem to consider it pointless (in this case) & instead i should just start paying this instant? I've had a read of a couple articles on MSE. When paying into a stakeholder pension, is there a need to be choosy or would any stakeholder pension do really?

Nine_Lives

atush wrote: »

And our mother age 50 should start one if she doesn't have one (esp if she still works and pays tax). If not, as long as she saves elsewhere into ISAs that will help.

My mum has been out of work since 2003. She claims 2 different types of benefits IIRC. I think one is incapacity, or it might be disability. I can't remember now. I know she has the blue badge, so likely disability allowance. Can't remember the other she gets. I know her income is low enough to qualify her for gross interest on savings.

atush wrote: »

It is my understanding that htey will have to in a fwe years time by law. So that should boost things for you.

I remember reading this a while ago also. Sounds like a good idea. Hopefully it'll happen.

fairleads

Loughton_Monkey wrote: »

There is absolutely no benefit in delaying it. In fact you can do worse than start a pension for your new born baby.......

I doubt it.

Nine_Lives

Just finished a chat with my dad on pensions. Misunderstood some of his advice from the last time we spoke, which explained a bit. Anyway, on to the stakeholder pension option...

And where to invest (invest may or may not be the wrong term to use, i don't know)? So i hop back onto MSE to see what sort of options i have

http://www.moneysavingexpert.com/savings/discount-pensions

Picking a stakeholder pension

Using this route means you're unadvised, often not a problem, but if you're confused, unsure, or have complex circumstances, it's best to be safe and see an IFA. Website https://www.unbiased.co.uk lists advisers local to you.

When choosing a provider fund choice, charges and institutional safety are the keys. MoneySaving's not investing, so you'll need to do some research into this.

For details of picking funds within stakeholder plans read pension extras.

And it seems my only option is to see an IFA. Either that or google "stakeholder pension" and then 'hit+hope' with my investment.

What are your views on WHERE to put the money? Is visiting an IFA my only option for this? Where should i invest or can you not go wrong (sort of)?

atush

fairleads wrote: »

I doubt it.

you are a noob. how can you know that child will grow up to be a self satisfied, self employed curmudgeon such as yourself? who has no idea nor any understanding that not everyone is now or ever will walk in your shoes?

They might end up as a normal working person in society. And will at least benefit from compound interest if not tax releif and empolyers contributions.

As of today, there nare no ISAs for babies. And even you mr isa didn't have one when you were 1-18.


We all understand now that you don't like pensions. That is OK for people in your exact circumstances. But I myslef don't pay capital gains or inheritance tax. But I would not ever give advice to those who do with my own circomstances in mind.

Quite frankly I am finding you a menace to newbies as you don't ever state or explain your bias that is founded only on your own financial circumstances. Not everyone will go thru life as lucky as you have. Nor be as self satified.:eek:

gadgetmind

K_P83 wrote: »

What are your views on WHERE to put the money? Is visiting an IFA my only option for this? Where should i invest or can you not go wrong (sort of)?

Every pension company will have "cautious managed" and "balanced managed" funds. The names are slightly bogus as it just tells you the bond versus equity split. There will also (with a good pension) be funds covering global equity, pacific basin, asia, japan, big companies, small companies, and much much more.

Any IFA that tells you there is some secret sauce regards choosing such funds is lying. Pick a mix that suits you risk profile(1), sit back, and relax. If things look bad, wait another decade, keep feeding in the money, and they should look good again. Such is the joy of long term investing.

(1) - it's probably balanced managed. Even those who choose their own funds with a micrometer screw gauge tend to end up deworseifiying to this.