pension questions

saving123

Hi, hoping to get some advice regarding my husbands pension. He is basically self employed so has no employer to contribute. We have been contributing just over £100 per month since he was 30 (past 5 years) and i am now starting to worry as obviously we need to contribute a lot more. Is it best to pay it all to one bank or should we split it over 2 banks? I am wondering what would happen if you had a pension and the bank went bust?! I know maybe unlikely to happen but always like to be on safe side. Also what % of his salary should we be looking to contribute? I am likely to get 40/60th pension so might be okay to have slightly lower pension for him?!

thanks

dunstonh

He is basically self employed so has no employer to contribute.

Also means he gets a lower state pension as well.

We have been contributing just over £100 per month since he was 30 (past 5 years)

Which is a low payment for someone starting late and is self employed.

Is it best to pay it all to one bank or should we split it over 2 banks?

You shouldnt be paying it to any bank. It should be a pension company. Some banks may have an insurance company under their brand but their offerings tend to be quite poor or expensive (I saw an HSBC one recently which was dire)

I am wondering what would happen if you had a pension and the bank went bust?!

Nothing. The insurance company and the bank are two different things. Even if they share the same logo.

Also what % of his salary should we be looking to contribute?

How much does he want to earn in retirement and from what age?

saving123

thanks so much for your reply. It definately gives me a lot to think about. How much less of a state pension will he get? He has worked employed some years and self employed other years, will it be pro rata for years worked employed?

Appreciate its a low payment and also that he is late to start, hoping we can catch up.

The current pension he has is with halifax, should we keep that but do another pension elsewhere or completely come out of that and start elsewhere?

Are there risks involved with paying into a private pension that if the pension company goes bust you could lose all your pension?

He will probably retire at 65, not sure how much he would want - maybe 12000?

thanks again

JoeCrystal

Well, if he want projected income of £12,000 from his pension fund. Starting with a fund of £6000 and retiring in thirty years, he would need to pay in much higher amount, roughly £430 per month (Assuming it grows by 7% per year) according to my favourite pension calculator.

It might be worth seeing an IFA about it to be frank. Halifax and indeed, banks' pension schemes are pretty awful in my opinion.

Cheers

Joe

Linton

First step I would suggest is to determine how much money you need to maintain an acceptable standard of living. A good start is how much money you need now after expenses that will no longer apply are ignored (eg mortgage if you plan to pay it off by retirement, childcare).

Second step - get some idea of amount of money required to achieve that income. You could use a retirement planner, there are many around; Standard Life's for example.

Many people do not understand the cost of providing for retirement, so prepare to be shocked at the results.

atush

Apply for a state pension forcast for both of you. If you know how much you will get, you can subtract that from the amt you think you want to live on.

dasherman

saving123 wrote: »

He will probably retire at 65, not sure how much he would want - maybe 12000?

Bear in mind that his state pension age will be at least 67.