Advice needed ?

Cameron1590_2

Mayo Mayommm

atush

No age is too young, even babies can have one now.

the best time is the earliest time (this money has the longest time to grow- think of planting a tree each year and see which one is biggest in 40 years?)

the best pension is the one your employer pays into. If they don't now, they will have to very shortly.

No, you don't lose everything if the pension company goes under. your money is ring fenced. your money goes up or down depending on how the investments you choose do. The pension company lives or dies on their profits, which can be based on how well you do so they want you to do well.. but if they fail, your money will still be there.

answer these questions/ideas, then get back.

Cameron1590_2

Hi,

Thanks for the speedy reply ! Wow I didnt know it would be a good idea to start now !

So two more questions, what if I went for a pension the company have to pay into and I went to work for a different company in the future ? Also say I pay into a pension for 50 years and die after two years of drawing my pension (bit negative I know!) Does this go to my Family ? I have heard things about the government gets it ?

Regards

kidmugsy

Cameron1590 wrote: »

Hi,

So two more questions, what if I went for a pension the company have to pay into and I went to work for a different company in the future ? Also say I pay into a pension for 50 years and die after two years of drawing my pension (bit negative I know!) Does this go to my Family ? I have heard things about the government gets it ?

Regards

(i) When you change employer you can usually choose either to leave your pension to grow until you retire, or transfer it into a different pension.
(ii) If you draw the pension for two years and then die, what becomes of the money depends on the terms of the pension ("annuity") that you opted for. For instance, the pension might transfer to your widow. Or the fund may pay out another, say, eight years worth of payments into your estate, so that that money ends up wherever your will specified. If you arranged neither of these outcomes, then the money eventually ends up with the other annuity-buyers who outlived their life expectancies. Similarly if some other person dies early and you die late, they subsidise you: that's the whole point, to try to make make sure that nobody outlives their wealth and becomes penniless. It never ends up with the government.

R_P_W

I started paying into mine when I as 19. Started with 6% a month and my employer paid 8%. 11 years later I have decided to increase my contribution to 8% and my employer now pays in 9%. In on a decent salary now but when I first started was only on ~£12k a year.

I take some comfort in knowing that I started early but it is something I think more seriously about now I'm 30. I did consider paying in more however its a balance between overpaying mortgage, cash savings and thinking about more medium term investments.

Lots of my friends I know have not even given pensions a thought and I think they are something for older people - which I guess they are - but unless you start paying in to one you are very going to be very disappointed when retire (if they are ever able to).

You are definately doing the right thing, don't overstretch yourself on payments just yet - you still have a life to lead and would be wise to try and save some cash as well.

atush

So, yes you can traansfer a pension if you leave an employer (although you can leave it there as well and just start a new one in many cases). Esp for Final salary pensions, you'd leave those. There are cases when you work for less than a year (or 2) when you will lose your employers contributions and the tax relief if you don't transfer it.

Second- if you die two years after taking pension benefits- all depends on how you took your pension. First, you get 25% tax free lump sum. This would be there in your accts if you hadn't spent it. Then, you can choose annuity or Drawdown (where the pension remains invested and you just draw an income).

With annuities, you can choose a guarantee pmt period of 5-10 years which would mean it would py out for that long even if you died. There is the option of a spouse pension, if you die and if you choose that option it will continue (probably at a reduced rate such as 50%). Or if you choose DD instead (which many do now) your pension pot can be 100% inherited by your spouse if they leave it in the pension to draw a pension from themselves. If they money is paid out to other relatives, or taken out as a lump sum by a spouse/partner then it will be subject to a tax charge (which more or less takes back the tax relief it has received over the years).

you do also have to think about medium and short term savings goals as well as long term (ie pensions). this will mean saving in cash 6 months of your spending (in cash Isas if you pay cash at least some of which should be instant access if not all) then other goals such as ouse deposit, marriage, children etc. Basically, all goals 5 years or less you should look to cash first (again ISAs where possible and regular savers and others when they are full) and then investments such as funds, investment trusts and shares (in a S&S ISA i) if they are longer than 5 years away (some say 10 years).

so, good luck to you!