Confused - what if??

clairep_4

Ok - very confused about this whole pension thing!! I'm 31 and know I should have a pension but quite frankly I get scared off quite easily by financial jargon. BUT I'm biting the bullet and finally sorting something out. Thing is hubby and I are planning baby number 2 which will probably mean that I will give up work to be a stay at home mum but what would happen with my pension. Any advice please but be gentle - no jargon please!!

tyllwyd

Have you got a company or personal pension at all at the moment, or are you starting from scratch? Do you have any savings (in an ISA or elsewhere) that are part of your retirement planning?

EdInvestor

First of all check out your situation re the 2 state pensions, and check hubby as well.

https://www.thepensionservice.gov.uk

Second, are you buying or renting?

clairep_4

I'm starting from scratch - no pension of any kind - never worked for a company that offered them. I have got some savings that I'm thinking of combining into a pension to boost it (cos I feel like I've made a late start). Not sure if this is right thing to do??
Hubby has a company pension which he has contributed to for 7 years (same age as me) and we jointly own our house (with a mortgage!).
Thanks for link to the state pensions stuff will have a look - but one of the reasons I want to start now is because I've been led to believe that when I get to retirement age I won't have a state pension or am I wrong again???

chesky369

Maybe you should consider paying NI contributions whilst you're not working. I know that nowadays mothers do get some allowance towards this, but it's something you should check out when you get your pensions forecast.

chesky369

Remember, you're only 31, so as far as the state pension goes, you've got sufficient time to make up any contributions you may have missed - in which case there's no reason you won't get a state pension.

EdInvestor

clairep wrote:

I'm starting from scratch - no pension of any kind

Not so - there are the 2 state pensions, you have been misinformed.

I have got some savings that I'm thinking of combining into a pension to boost it (cos I feel like I've made a late start). Not sure if this is right thing to do??

Better to keep them in ISAs that in a pension if you are on basic rate tax or not earning.

Hubby has a company pension which he has contributed to for 7 years

Can we have more details of this?is it a final salary or money purchase pension? The former can be left alone (it will increase by inflation every year automatically) but the latter needs attention.

we jointly own our house (with a mortgage!).

Very good Getting a home is more important at your age than a pension IMHO if it's one or the other.

First check the state pension entitlement: that's the foundation for your retirement fund (you'll get credits for being at home looking after kids.) Come back and tell us the result and we can take it from there.

clairep_4

Right - so looked on the state pensions website and am a little clearer -not quite entitled to a basic pension as have only worked for 9 years but will go back to work when kids are grown up! And if I do give up work then I would be entitled to hrp. Maybe I'm naive and believe in media hype but it always seems to be in the news that there won't be a state pension when I get to retirement age? hence why we're always being told to get a pension? or have I got that wrong as well??

Not sure about hubby's pension - will find out when he gets home! Why is that important??

EdInvestor

clairep wrote:

Maybe I'm naive and believe in media hype but it always seems to be in the news that there won't be a state pension when I get to retirement age? hence why we're always being told to get a pension?

Possibly this is part of pension industry "marketing"....:rolleyes:

Not sure about hubby's pension - will find out when he gets home! Why is that important??

Ideally the household retirement income should be split equally, with the first 10k of income for both partners in (taxable) pensions and the next 10k in (tax free)ISAs. This means you will avoid paying almost all tax.

Often what happens (especially when there is a SAHM involved) is the husband has a largish combined pension pot of say 25k+ and the wife has only half a state pension and a few savings.As a result, her tax allowances are wasted and his age allowance is clawed back, so they pay thousands of pounds more tax than they need and have a lower income, quite unnecessarily.

tyllwyd

chesky369 wrote:

Maybe you should consider paying NI contributions whilst you're not working. I know that nowadays mothers do get some allowance towards this, but it's something you should check out when you get your pensions forecast.

If I've understood it correctly, while you are getting child benefit paid to you for a child under 16 then you are credited with qualifying years for the basic pension.
http://www.hmrc.gov.uk/childbenefit/cb-key.htm