Self-employed - please recommend a pension scheme

general_piffle

Hi, the world of pensions is a mysterious one to me so I need advice from people who know about these things.

I've just passed 40 and am self-employed, I have no pension plans in place and want to start taking care of things before it's too late.

What would you recommend and why?

Like all of us I hope to be able to put my feet up and not worry too much by the time I do come to retire! Thanks in advance

dunstonh

I've just passed 40 and am self-employed, I have no pension plans in place and want to start taking care of things before it's too late.

The "too late" boat has sailed I'm afraid. That said, if you are willing to pay enough towards it, then you could catch up.

First is the bad news. As you are self employed, you do not qualify for the full state pensions. Only the basic. If you spent your whole working life as self employed, then you end up with a basic state pension of just over £5000 a year. So, that is potentially what you are looking at presently.

To make up the lost additional state pensions will require a pension pot of around £120k. So, any self employed person with a pension worth less than £120k has effectively gone backwards.

What would you recommend and why?

impossible to answer on the lack of information you have given. A good starting point is asking how much are you going to be paying? (there are more things but lets start with that one)

Like all of us I hope to be able to put my feet up and not worry too much by the time I do come to retire!

I fear that may not be an option for you unless you have other means or plan to make significant contributions over the next 30 years.

zygurat789

By the time you come to retire the state retiring age will probably be 70 so you could have 30 years to save for your pension. Although the basic pension is only c£5k pa there are other benefits which mean that you could receive considerably more. There is also an idea being floated by the govt. to raise the pension to c£7.3k pa.
If you were to save £2k pa, which would actually mean a payment of £133pm, this could grow into a pot of over £120k in 30 years assuming a modest average growth rate of 4.5%. At today's historically low annuity rates this would give you a pension of c£6k pa on top of any state pension.

I don't think it is ever too late to start saving but the longer you delay the less you will have in your retirement.

general_piffle

@ dunstonh - thanks for the tough but honest advice, have sent you a PM, in terms of contribution I think I can mange £150 / month. I say think because working for yourself can be unpredictable! Any further questions on details you need from me please ask.

@ zygurat789 - thanks for your advice as well, I agree that it's never too late however I have some catching up to do! With £150 to put away each month what could I be looking at and who best to save with? Schemes / off-shore (like some MetLife products), it's a mystery to me at the moment!

JoeCrystal

To be fair, general_piffle, £150 per month is very low for forty years old with no pension provision. Lot of private pension scheme have £100 per month as minimum contribution.

Here is one Pension Calculator to help you to figure out just how much it requires. As it is, if you spend next twenty five years paying £150 per month, it may potentially provide you an income of £3,000 per year IF you are very lucky with returns.

Which is why I am feeling some serious doubt at zygurat789's outlook on pension. I am just curious as how zygurat789 came up with the figures.

Cheers

Joe