Self employed, personal pension

Loughton_Monkey

gbgeer43 wrote: »

....I'm 29 and a self-employed IT contractor. Over the past few months I've been really meaning to get a pension sorted as the sooner I start the better. Oh and I do have a student loan still hanging around as well......

....Thanks in advance!
ISA rates are so terrible right now that my partner and I have been overpaying on our mortgage like mad. But I'd like to try and get a pension sorted so I can start contributing to that sooner rather than later.

Cheers, B

I note you have had detailed response to most of the queries, so I will limit my comments to more 'strategic' ones:

There's absolutely nothing wrong with steaming ahead to get a pension sorted out. But please don't make the mistake of thinking that this means that your retirement is now 'sorted'.

It is, I'm afraid, patently obvious [from these boards] that 90+% of questions asked tend to come in the form 'how much should I invest.... and what sort of pension.....' All very valid, but the real question is this: "Given what I earn, my age, and what I am likely to earn in the future, what is the correct level of spending can I make so that I can continue to spend the same amount after retirement?"

[I define 'spending' as 'lifestyle' spending - which would not include one-offs such as education cost for kids, mortgage interest etc.]

This, you can imagine, is a totally different question. Or put another way, it is a bit pointless investing 8% of income in retirement, and being 'clever' in your advice/funds/charges so that you return 8% rather than only 7%, when you should be investing 22% in the first place!

Then overlay this point with the fact that the closer you get to retirement, then your physical ability to affect retirement savings becomes exponentially more difficult.

This is why age 29 is certainly not too young to be modelling out details of your current expenditure, how this is adding up to your 'lifestyle cost', and what will happen over the remaining 37 years of working life. Make assumptions of pension investment growth, plus growth of other assets and savings/interest. Make assumptions of inflation etc. and wage inflation/career progression....

Life will never mirror that projection exactly but if it broadly adds up now, you can sleep at nights and review it every year or so. Just like a huge oil tanker, you can notice if it is veering away from course and you have time to correct it before it's too late.

This process doesn't take long. The small 'chore' of keeping reasonably detailed accounts is not difficult. But I believe it's essential to ensure that your overall retirement savings are in the correct order of magnitude.

Only on top of that is it sensible, of course, to review specific investment vehicles [such as pensions] and do what you can to squeeze 1% better performance here, and ½% lower charges there.

Most people who don't follow this procedure, tend to 'wake up' at age 55, possibly thinking of early retirement, only to find that they can't even retire comfortably at state pension age - and often blame it on low pension performance, bad advice..... and then wonder how they can 'correct' it within the next 3 years. Just look at prior threads to confirm this.

Good luck.

fairleads

CannySaver wrote: »

"Most" evidence please? Or just a glib easy statement to make without the need to back it up with hard evidence?

You obviously don't read the national and financial press, let alone the info provided by Martin on this his web.
Interesting is that MSE is probably the best financial web in the UK.

jem16

fairleads wrote: »

You obviously don't read the national and financial press, let alone the info provided by Martin on this his web.

You are surely not citing journalistic sensationalism as your hard evidence, are you?

fairleads

jem16 wrote: »

You are surely not citing journalistic sensationalism as your hard evidence, are you?

yes i am because there is no smoke without fire.

fairleads

jem16 wrote: »

Based on factual information of the 3 tax wrappers that I utilise, the highest RIY was on an ISA fund.

Which begs the question............

fairleads

jem16 wrote: »

How many pensions have you had and when was the most recent?

None to speak of, however thats irrelevant because but the people i was refering to are IFA's. They know the true cost of pensions.

jem16

fairleads wrote: »

yes i am because there is no smoke without fire.

Smoking clouds your judgement.

fairleads wrote: »

None to speak of, however thats irrelevant because but the people i was refering to are IFA's. They know the true cost of pensions.

Hardly irrelevant that you have no actual experience of a product you are decrying as a part of retirement planning.

As to IFAs the true cost of the pension is quite clearly laid out in the KFD - read before buying and ask questions. Ask to see the research as to why that pension is best for you - that's what you are paying advice for.

If you are DIYing then you have to find out yourself.

fairleads

jem16 wrote: »

As to IFAs the true cost of the pension is quite clearly laid out in the KFD - read before buying and ask questions. Ask to see the research as to why that pension is best for you - that's what you are paying advice for.

Missed the point completely. The true cost of the pension is apparent only at the point of retirement, when the annuitant realises theres not enough in the pot to provide a livable income, but by then it's too late to change.

Ark_Welder

http://www.youtube.com/watch?v=9rHNOTtShwM

jem16

fairleads wrote: »

Missed the point completely.

No I didn't - you changed the point. One minute it was only IFAs only that knew the true cost of pensions - now it's the annuitant.

The true cost of the pension is apparent only at the point of retirement, when the annuitant realises theres not enough in the pot to provide a livable income, but by then it's too late to change.

Like any investment, be it ISA, pension or unwrapped, you should be reviewing it at least yearly.

Anyone that sticks £50pm into an investment, never reviews it and forgets about it for 40 years is likely to fail no matter what wrapper or non-wrapper is used.