22 and thinking about pensions.

Southernman

I currently have a pension with my employer of which i put in 4% of my wage amounting to around £62 a month. I am planning on increasing it to 6% in March so it is closer to the £100 mark. If i'm being honest, i don't know if the pension is any good. RBS don't double the percentage i put in and i am wondering if i'm better off investing elsewhere. Clearly the times of final salary pension are no more and i just need some guidance on pensions and whether it'd be worth subscribing to two?

I'm also wondering if i'm worrying at too young an age and should focus on more important things like paying off my mortgage and enjoying my life while i can.

caeler

Your never too young to be in a pension! Without more information nobody here can tell you if your in a good pension or not (they'd need a few more details!!) however you could always see a financial advisor for some guidance.

funscott

does your employer also contribute for you?

remember the 20% tax free contribution.

compound interest

ok you cant get at it until your 55+ but with all of the above its a good saving.

I started mine at 22 (now 29), started at 8% and now upto 12% plus my work pays 5%. good tip. every payrise you get increase your contributions by 1% as you wont miss it.

the longer you have a pension fund the better you get at the end. just remember to keep increasing your contributions as you go. unless your happy living on 5k a year off the state (if it even exists then)

atush

How much does your employer put in at all? Generally speaking putting in half your age at the time you start (incl tax releif and employer's contribs) is considered wise- so in your case a total of 11%. And increase each year as you get pay rises.

but what else have you got- have you got cash savings? 6 months spending is considered wise, and use tax shelters such as ISAs where possible to save on tax. Do you own your own home, or are you thinking of doing? That means more savings outside a pension. Saving for holidays and other shrot term items is also a good idea.

and congrats on thinking of pensions so young ;-) You will be glad you did.

Southernman

RBS puts in 0

NOTHING.

Which is what worries me.

Yes i do have an ISA of about £3500 currently plus none ISA savings of £3000 for everyday potential disasters such as a washing machine breaking etc

The maximum contribution you can put in is 15% of your wage. For me currently amounting to around £230 a month.

I have a mortgage which i make overpayments to every month as well.

Shimrod

Southernman wrote: »

RBS puts in 0

NOTHING.

The maximum contribution you can put in is 15% of your wage. For me currently amounting to around £230 a month.

Do you work for RBS, or is your pension with RBS? A quick poke of the internet reveals that RBS will contribute 15% of salary to the defined contribution scheme, so something doesn't sound right.

atush

The good news is, owned by the govt or not, RBS will HAVE to start contributing soon, esp as they are such a large emplyer. 2012-13 most likely? HAs to be by 2016. So that will help. But def increase your contribs.

You have a mtg, and are overpaying- great!

Now, your savings- is the 3500 ISA cahs or S&S? What rate are you getting in cash? You sould probably move some or all of this to an ISA as you are paying tax on it. Aim to raise cash savings to 6 months spending.

So, age 22- job, check. Mtg, check. pensions, check. Savings, check.

Very very very good for your age. but do increase both savings and pension.

Southernman

It's in a Cash ISA instant access at 3.3% which i never touch.The other one is 1.75% but i need the instant access on that as i swap money around so regularly. I'd rather overpay on my mortgage as the interest rate is 4.39 fixed so higher than any interest on my savings.

RBS provide a value account added onto your basic wage. You then decide how much you want to put in up to a maximum of 15%. I put in 4% currently but now I'm more settled in my flat i can put in more plus as someone previously mentioned, my payrise in April will result in an increase in the percentage i'm putting in. April 2013 will see another percentage rise and so on.

Someone has mentioned SiPPS (?) to me before but i have no clue what this is and whether i should consider two investments for old age.

Literally no one i work with put into a pension though.

atush

SIPPs are self invested personal pensions. Where you choose what to invest your opension in and do the trades yourself.

Still dont' understand your pension or lack thereof (with the info above saying RBS put in 15%). but whatever it is think of maximising your contribs.

ISas. You are allowed one per year. So if your old one is from last tax year you can move the money getting only 1.75% into one paying better. Or if not, into the old one- you can put in $5340 per year and it makes no sense to be getting les than 3% just because you want to keep the money seperate. There are instant access accts paying mroe thn 3% so you are just p*ssing oney away really on tax paid that you dont' need to and lost interest on some of your money.

Southernman

I just like it separate. Some of the money will be gone shortly for a holiday and i get a bonus in February where i'll get an extra £1200 after tax to play around with. If i'd put the money in my 1.75% into the ISA then taken out £2000 for the holiday then i wouldn't be able to put the bonus payments in in February. I'm biding my time and being sensible as I'm aware of the ISA allocations.

Yes maybe i'd be getting a higher interest but for a few months where i may lose £2-3 max, i'm not overly fussed.