Pension need to knows Official MSE Guide Discussion

toothbruth1

Hi im 45 years old with no pension at all. Im not working housewife and mother. Have not worked for 16 years been aplying but no luck. Would like to save for my own pension pot. I have savings to put in one. Hubby has work pension.  Where do i go whats a good deal for me im too old for Lisa. 

Manutd57

I have a final salary pension pot ready to take out before 6th August do I take it out of my works pension and put it into stocks a shares leave it till nxt year

dunstonh

Manutd57 said:

I have a final salary pension pot ready to take out before 6th August do I take it out of my works pension and put it into stocks a shares leave it till nxt year

What do you gain by doing that?  (ISA is less tax-efficient than a pension in most scenarios. but not all).
A final salary pension does not have a pot.  Are you sure its a final salary scheme?

LHW99

toothbruth1 said:

Hi im 45 years old with no pension at all. Im not working housewife and mother. Have not worked for 16 years been aplying but no luck. Would like to save for my own pension pot. I have savings to put in one. Hubby has work pension.  Where do i go whats a good deal for me im too old for Lisa. 

Have you checked your state pension? if you have been / are getting child benefit, you should have some credits.

if your household income is too high for you to actually be paid CB, you should still sign up, and tick the relevant box to decline the payment. That way you still get credits.

If you have been signing on, then you should also get them.

As far as pension contributions, you could start a personal pension or a SIPP, and put in up to £2800pa and get the Goverment contribution to bring it up to £3600.

phantomtraveller1

At 67. I have finally decided to retire. I have a small pot in a workplace pension, not enough to give me a steady return. So will be withdrawing it. How penalised will i be on the withdrawal? As in tax. Any help would be appreciated.

Notepad_Phil

phantomtraveller1 said:

At 67. I have finally decided to retire. I have a small pot in a workplace pension, not enough to give me a steady return. So will be withdrawing it. How penalised will i be on the withdrawal? As in tax. Any help would be appreciated.

Assuming that is a Defined Contribution pension rather than a Defined Benefit pension then you'll normally get a tax-free lump sum of 25% (though it may be higher on some older pensions) and the rest will be treated as income. So the answer will depend on what salary you've received so far this tax year, your tax code and how much is in the pot.

However you will find that withdrawing it in one is likely to mean that the pension company will work out the tax on an emergency basis i.e. as if you were receiving that lump sum as a monthly salary (see https://www.hl.co.uk/retirement/preparing/tax-matters/emergency-calculator and leave the withdrawal type as UFPLS to check what that is likely to be).

You can of course reclaim the overpayment of tax yourself or if you don't get around to it then at some time in the next tax year the HMRC will when they do their calculations.

slenderkitten

Hi i've been doing agency work the last 3 years not permanent work.  I have a small pot in the nest scheme and the same again in Scottish Widows as that is what the last ccompany used not nest. I don't really understand pensions, but is it better for me to keep the money in the two pension companies or put both into one I am aware that there are fees to have them?
Again, I do not understand pensions so please keep your reply simple?

LHW99

slenderkitten said:

Hi i've been doing agency work the last 3 years not permanent work.  I have a small pot in the nest scheme and the same again in Scottish Widows as that is what the last ccompany used not nest. I don't really understand pensions, but is it better for me to keep the money in the two pension companies or put both into one I am aware that there are fees to have them?
Again, I do not understand pensions so please keep your reply simple?

Advantages of combining include - simplicity (in paperwork), possibly lower charges (depending on the pensions themselves)

Disadvantages include - loss of flexibility (able to draw on one pot while leaving the other invested), loss of ability to use the "small pots rule" if one is less than £10k at retirement.

Other factors will / may be relevant depending on the details of what you have, and future work / retirement plans.

naive1

Hello, I apologise if this is a really stupid question, but it is possible that I could invest in my workplace pension scheme, accept their investment recommendations, but then because they choose to invest in companies that go bust or if the pension company themselves go bust, I could end up with no pension at all (i.e., not even the contributions I had made)?  I would like to invest more in my pension scheme, but I want to know if it is as safe as putting money in a savings account, and I cannot get a straight answer about this from my employer or from their pension provider!  Many thanks for any guidance.

dunstonh

t is possible that I could invest in my workplace pension scheme, accept their investment recommendations, but then because they choose to invest in companies that go bust or if the pension company themselves go bust, I could end up with no pension at all (i.e., not even the contributions I had made)?

Theoretically yes.   However, it has never happened.  It would take an armeggeden style event that throws society back into the dark ages for that to happen.    You wouldnt be caring about your pension then as money would have no value.

but I want to know if it is as safe as putting money in a savings account,

In some ways it is safer.  In some ways it incurs more risk.

Money in a savings account generally fails to keep up with inflation and loses money in real terms.  £100k in 10 years time would have the spending power of around £67,000 with no interest or investment returns.     If you put that £100k in a savings account, interest would generally just fall short of inflation and in 10 years you would have the spending power of around £90k.    it may say £120,000 on the statement but it has less buying power.

Investments will zig zag in value.   Your £100k could go to £90k then to £110k, £120k, £105k, £135k etc etc.   The expectation is that the zig zag line will be in an upward trend.   You can reduce the zig zagging into more wavy line by taking less risk.

However, you do not want to take too little risk as you may reduce/remove the zig zagging but you leave yourself open to inflation and not having enough in retirement.     You need to take a sensible level of risk.