29 and no pension yet. Does this sound like a good plan?

TheMoneySavingator

I forgot to say Im technically self employed so I have to set all this up myself, hence the no pension scheme. Is there any benefit of being self employed and setting up a pension! :-S

atush

If you actually work for a company, they will HAVE to offer you a pension scheme in a few years time (by 2016).

In the meantime, put as much in as you can afford (and half your age as a percentage is a good benchmark but anything is better than nothing. in your case you are looking at 12-13% contribs to begin with at age 25.

Be aware you get tax relief at your highest rate, so you wil have more going into the pension than you yourself put there.

And also you should first make sure you have several months spending in cash savings (in an ISA is good) for emergencies.

JoeCrystal

TheMoneySavingator wrote: »

I forgot to say Im technically self employed so I have to set all this up myself, hence the no pension scheme. Is there any benefit of being self employed and setting up a pension! :-S

Actually, it is big disadvantage for self employed as they do not pay Class 1 NI contributions, so they miss out a top-up to the basic state pension. You still get basic state pension (Roughly £5,500 per year) providing you get thirty years credit. That is one of the reasons why National Insurance for self employed are so low. The idea is that self employed are required to make their own provision for retirement along with other provisions.

I myself pay £308 per month which is about 25% of my basic wage but that is (currently!) sustainable due to Working Tax Credit and Bonus. The fact is that there are lot of personal pension scheme which requires a minimum of £100 per month though I did see one with £200 per month. Stakeholder pension schemes on other hand have a minimum contribution of £20 per month though.

There is a pension calculator you can use to play around with the figures.

Needless to say, I agreed with atush's point that it is better to save something into a pension rather than nothing at all!

Cheers

Joe