Need to start a new pension after leaving old job

Hurdler

Hi all
I took Voluntary Redundancy from a job where I had a final salary pension, and was aiming to go contracting, and train for a career change.
I was very lucky to land a job, but it's not going to be long term - and I intend to leave after 2 years at the most to hopefully move into Journalism.

I am looking at setting up a Stakeholder pension, but struggling to decide how much to put in.

I was on a capped salary sacrifice before I left my old job at around 5% of my salary with contributions from the company.

But reading the advice on MSE - I should be putting in 21% if I am starting now? Surely that would be if I was starting from scratch, as opposed to having started paying in when I started work some 19 years ago.

I was considering starting at 5% of my now larger salary although if I do the same calculation based on when I started work - I should be putting 11.5% of my salary - which would be quite steep.

Any advice would be welcome...

atush

The first thing that comes to mind is that to move into journalism could be a mistake as the job market for the profession is contracting rather than expanding as more people get new online rather than newprint or even tv.

Second, yes I would assume that as you have 19 years of a FS scheme you don't need to ut in half your age in contribs at this point. With your new job will you still be a basic rate payer? Do you have cash isas and S&S Isas? These might be an area to address if you haven't already.

Hurdler

well understand the risk - but looking for a career change - although before landing this new job, I had set up a Limited company for IT contracting, so to be honest contracting is on the cards in the next 24 month timeframe (and I suppose I am in the fortunate position that I have experience in the IT industry to fall back on)... it's all about following my dream to be honest. People are still required to put up Online Content, and have picked up the odd freelance gig from time to time - but alas emphasis on free! In order to make some money out of it, I have to have an industry recognised qualification behind me - hence getting on a Journalism Diploma...!

Current job is doing what I did for old job but with more money - so my plan is to capitalise by throwing money at my mortgage over the next few years.

I have already chucked the Tax Free lump sum of my Vol Red money at the mortgage ahead of the annual recalculation and the rest is my emergency fund.
I also have 2 ISAs at full whack, and I have a number of investments (including some inherited from my late dad) that I haven't really gotten my head round in terms of amounts. I have an afternoon off so I need to head into town to get some stuff sorted, this being one of them. As a rule of thumb I have upped the amount I used to pay in for my old job... and will have to assess how much more I can squeeze once I have had a few salaries come in!

New job - I continue to be a high rate tax payer, and I have some left over tax owing due to some screw-ups with company car calculations with the old job to come off my tax code.

I am not planning on dropping to IT/Journo Contracting for at least 12-18 months (setting myself a target of 2 years)... I need to avail myself of the opportunity of more technical breadth (already happening in the role, which is great) and some technical certifications, as well as training as a Journo with a hope of maybe some contracting work mainly in the tennis field.
BUT - also (and I think this helped in the interview) with many years experience in the IT trade, I also wouldn't shut the door on more technically focussed journalism.

I used to get hung up about banks changing their ISA offerings each year and having multiple ISAs (cashed in a couple when I first bought the house for MUCH NEEDED repairs!)... and on next year's allowance, looking to use a lot of the emergency fund to take more off the mortgage - although I was considering (come bonus time) splitting the bonus between Mortgage and adding a chunk to the Pension pot as per Martin's advice...

I think I'm in relatively good shape - but as I am 42 and still theoretically half of my life left to still work (!) I want to make sure that in the latter half of my life, I prepare as well as possible, but still allow myself to have a life.

CLAPTON

does your new job offer a pension with an employer contribution?


consider than a final salary scheme requires over 20% contibutions and take it from there.

dunstonh

But reading the advice on MSE - I should be putting in 21% if I am starting now? Surely that would be if I was starting from scratch, as opposed to having started paying in when I started work some 19 years ago.

This is why you shouldnt take advice from internet sites which are not authorised to give advice. You are right, it does not apply to someone who already has retirement provision. Indeed, it doenst really apply to anyone. It is just a guide to get you thinking of the realistic level of contribution you should be paying.

I am looking at setting up a Stakeholder pension, but struggling to decide how much to put in.

Why are you looking at stakeholder pensions? Typically they are not the cheapest option and dont offer the best investment options. They are really for people paying very small amounts.

Hurdler

Because once I leave this job and take up contracting again - I may well be only able to pay in smaller amounts depending on what contracts I get. It's a bit frustrating really as there was just NOTHING doing when I first left my old job, so I planned to get some key certification that might help... and then I got bombarded with full time offers. I felt I couldn't turn this new role down in this climate - but it is a foreign company with quite a few catches (pension being one of them)...

This is never going to be as long a deal as with my previous job, where I stayed 18.5 years! I seem to be going from one extreme to another!!!

atush

Well, if you are a higher rate taxpayer (with lots of other savings and investments) then yes you should set up a personal pension to cover you in your new flexible working years.

Direct with a provider, or with an IFA will depend on how much per year you will be contributing.

Hurdler

OK just dug out an IFA near me - I may as well make the most of having an afternoon off -
@dunstoh - initial chat does indeed suggest that a Personal Pension may be better if we can find one that can deal with a potentially more flexible work-life situation.
And also it means I don't have to traipse into town to ask the bank to verify that I am who I say I am! I can go straight there with all the gubbins and take it from there.

Thanks to those who offered advice - much appreciated and I feel a bit happier now getting someone to perhaps help me consolidate everything while I am in the fortunate position to be able to do so.