Starting a New Pension!

cbfire999

With all of the doom and gloom surrounding pensions over the last couple of days and the months previous, I would like to ask experts out there whether now is a good time to start a private pension?

I am 45 and currently receiving a forces pension but with the change from CPI tp RPI these pensions are not as good as was hoped when I joined many years ago and as such I want to make sure that I am sorted when I stop work. I realize that my contributions will have to be quite considerable to make it worthwhile but as the markets are at a low is now a good time to start?

Thanks

Lokolo

It's always a good time to be putting money away for retirement, no matter how the markets are. It will be better to buy into equities now than last week, but as your retirement contributions are likely to be over the next 15+ years then the last few weeks is going to make little difference.

The biggest factor will be how much you contribute.

mania112

It's ALWAYS a good time to start a pension.

But yes, fund values are low at the moment - although climbing back up, so the sooner the better.

However, you need to realise that if you're regularly contributing to a pension, you pay the price for a fund at the rate ON THE DAY YOU BUY IT.

Each month the price will be different - generally in an increasing value. So you will benefit from the recent downturn NOW (for your first contribution) but in the future, you'll be paying the current market rate (which hopefully will continue to rise)

If you're looking for a place to start a pension, try here: www.wswifa.com/startapension

gadgetmind

cbfire999 wrote: »

as the markets are at a low is now a good time to start?

The best time to start is always "now!" as trying to time the market is pretty futile. You'll hopefully be paying in every month for between one and two decades so you'll be exposed to all kind of conditions.

As to whether a pension makes sense for you depends on your tax situation and whether your employer will make a contribution on top of your own. If you only pay basic rate tax, and there is no employer contribution, then a pension is still worthwhile but not as much of a "no brainer" as it would be under other conditions.

cbfire999

Thanks for all the quick replies, much appreciated so far. I may not have given all the facts correctly so not sure if this makes a difference as one of the replies mentioned the tax implications and employer contributions!

Since leaving the military, I became self employed and now run a Ltd Company with a colleague. The contributions will be made by the company as I believe this to be a tax efficient way of saving in to a pension?

Thanks again

atush

Yes, it is a very good time to start a pension.

gadgetmind

cbfire999 wrote: »

Since leaving the military, I became self employed and now run a Ltd Company with a colleague. The contributions will be made by the company as I believe this to be a tax efficient way of saving in to a pension?

Yes, but do a bit of research and/or bounce it off your accountant. If you're not caught out by IR35, then you can get money out pretty efficient via dividends, so saving into ISAs can work well. However, if caught by IR35, or if paying extra tax on the dividends due to being higher rate, then the pension makes a lot of sense.

Make sure you go with something where you're free to vary amounts and/or pay in lump sums easily.

Also have a play with this pension calculator to see what kind of sums you'll need to be paying in to meet your retirement needs.

http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

dunstonh

With all of the doom and gloom surrounding pensions over the last couple of days and the months previous, I would like to ask experts out there whether now is a good time to start a private pension?

What doom and gloom? If you mean stupid reporting of short term losses (whilst totally ignoring the short term gains - i.e. did you realise that October had the best performance of any month in the last 25 years? - probably not as you only see the negative periods reported).

but as the markets are at a low is now a good time to start?

Markets are not particularly low at the moment. However, in the long term, short term volatility has very little impact. Although monthly contributions can take advantage of it very nicely.

mania112

dunstonh wrote: »

Markets are not particularly low at the moment

Well, on 4th October the FTSE100 fell below 5000 for the first time in over a year.

I would say the markets are (still) relatively low.

dunstonh

Well, on 4th October the FTSE100 fell below 5000 for the first time in over a year.

Since august, the FTSE100 has moved between 4900 and 5500 six times (with differing but similar peak/troughs). It is currently 5526.

Long term, it looks low but on current growth prospects for the short term, it looks about right but wouldnt be surprised if we saw it drop to 5000 again. I hope it does as I want to put another £10k in my pension before the tax year is out.

gadgetmind

dunstonh wrote: »

I hope it does as I want to put another £10k in my pension before the tax year is out.

I've got some carry forward to "use or lose" so I'm in the same boat. I'm probably going to get the money in there but more it into equities in chunks.

I'll probably leave buying bonds/gilts until the tax rebate arrives, possibly longer.