Haven't got a pension!

pollyanna24

I'm actually starting to get worried about this now, although I don't have the first clue about pensions, so not sure even where to start.

I'm in the process of majorally overpaying on my mortgage and want to be mortgage free by the time I'm 40 (in 8 1/2 years). I will only own half the house as I own it with my brother.

We are going to be putting a lump sum of £20,000 on the mortgage next month, but now I'm thinking do I have my priorities all wrong? Should this be my main concern at the moment or should getting a pension be?

I'm also worried about any pension going bust (do they do this, I don't no?) that I might put money into and lose it all.

Would state pension be enough to live on (considering I'll own my house and be able to save money from the age of 40 till I retire)?

xylophone

Does your employer offer a pension?

https://www.gov.uk/workplacepensions?gclid=CK_tjvmm_LUCFczHtAodwR4AJQ

http://www.pensionsadvisoryservice.org.uk/
Assuming you are paying your NI contributions, you'll presumably be in line for whatever the single tier state pension is in around 35 years time.
http://www.ft.com/cms/s/0/3fed89b2-9090-11e2-a456-00144feabdc0.html#axzz2O5tzZbzK
http://www.dwp.gov.uk/docs/single-tier-pension.pdf

atush

State pension isn't enough to live on.

Overpaying yur mtg can be a good idea, but not to the exc lusion of a pension. ?You can and should do both. What is your mtg rate?

Pensions don't go bust, the company could but your money is ring fenced. Your money is invested, and can go down as well as up. But over decades, the overall trend is up. And tends to outperform cash and property.

What is your tax rate? How much do you earn? A pension gets tax relief at your highest rate (for any income over the threshold) so you could be paying only 60 for every 100 going into a pension?

Do you have an employer? Do they have a pension scheme? The best pension to start with is the one your employer pays into for you (ie free money). If they don't now, they will have to soon. If they have one, and pay into it- join it TOMORROW and try not to be too upset about all the free money you have flushed down the swanny.

dunstonh

Should this be my main concern at the moment or should getting a pension be?

Your main concern is how you are going to live in retirement. Work backwards from that.

Would state pension be enough to live on (considering I'll own my house and be able to save money from the age of 40 till I retire)?

Basic state pension is little over £5000 a year. It is not designed to do anything other than keep you at the breadline.

'm also worried about any pension going bust (do they do this, I don't no?) that I might put money into and lose it all.

A pension cannot go bust, No they dont do this. Largely thanks to historical cases where it was possible.

bigfreddiel

dunstonh wrote: »

A pension cannot go bust, No they dont do this.

don't believe it - anyone who says they don't do this is deluded - it may seem unlikely but it will happen just when you don't expect it.
to quote but a few past examples of pennsions gone bad

robert maxwell - mirror group

equitable life

broken gov promises

personal pensions

go for it but expect the unxpected

fj

dunstonh

robert maxwell - mirror group

Cannot be repeated

equitable life

cannot be repeated

broken gov promises

irrelevant as it applies to anything and Govt wont bankrupt a pension.

personal pensions

banana

redbuzzard

To say that your pension provider will go bust when you least expect it is really scaremongering and frankly irresponsible, in my opinion.

Things have changed a lot since Maxwell stole the Mirror Group pensions.

It is a generalisation to say pensions won't go bust but it is a fair one.

Personal pension assets are normally held in trust by the provider. Beneficial ownership of shares and funds remains with the member. Insurance companies are covered by FSCS. Employer DB schemes are covered by the PPF.

SIPPs give access to a wide range of investments with different risks, but unit trusts and OEICs, the most commonly held assets, would not be accessible to creditors if the pension provider or fund manager went bust (so would be safe).

All pension providers are authorised by the FSA.

Some people don't take out pensions because they might die before they retire. That's a stupid reason, and it is many many times more likely to happen than the pension being lost through corporate failure. Even more likely is that you will live to draw your pension.

bigfreddiel

dunstonh wrote: »

Cannot be repeated

cannot be repeated

irrelevant as it applies to anything and Govt wont bankrupt a pension.

banana

:beer::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::beer:
you say all that but you really don't have a clue do you?

anything can happen and you know it but won't admit it


glad to help

see ya!

fj

GhIFA

pollyanna24 wrote: »

I'm actually starting to get worried about this now, although I don't have the first clue about pensions, so not sure even where to start.

I'm in the process of majorally overpaying on my mortgage and want to be mortgage free by the time I'm 40 (in 8 1/2 years). I will only own half the house as I own it with my brother.

We are going to be putting a lump sum of £20,000 on the mortgage next month, but now I'm thinking do I have my priorities all wrong? Should this be my main concern at the moment or should getting a pension be?

I'm also worried about any pension going bust (do they do this, I don't no?) that I might put money into and lose it all.

Would state pension be enough to live on (considering I'll own my house and be able to save money from the age of 40 till I retire)?

OP, to bring it back on topic from the ridiculous scaremongering that has gone on.

Pension planning should certainly be on the radar by now - as has been mentioned, check whether your employer has any provision as a starting point.

Losing all your money in a pension is a theoretical possibility. However, there are protections in place where an employer, or pension provider goes bust (how this works depends on what type of scheme it is). Beyond that, losing all of your money would more likely be down to a failing in the underlying investments rather than the pension, which would have the same result inside or outside a pension wrapper. For a pension holding a diversified investment portfolio to lose all of its money, would require all of the underlying investments to fail - as this is likely to be holding shares, bonds, cash, maybe some property investment etc it would mean massive systemic failures would have to occur which would suggest we had much larger problems to worry about!

Don't rely in the state pension. It's unlikely to be adequate at the moment, and this isn't a situation that is likely to change before you retire as there's likely to be further changes even beyond those planned for 2016. Although you may own your house when you retire, the only way that you can realistically use this to supplement the state pension would be through selling and downsizing - there's inherent risk in this as well, as the degree to which this will be able to boost your incomeis entirely dependant on the state of the property market at that time.

So, in answer to your question - yes, pension planning should be one of your priorities at this time.

pollyanna24

Thanks for everyone's replies. Certainly given me food for thought!

Think a pension is something I will have to look into then. Can anyone suggest a good starting point as to where I should look to get one?

I do have an employer, but he is a sole practitioning (is that even a word?!) solicitor and so not a big company and no pension available. I am aware of the adverts that say in time, he will to provide me with one, and I'm sure when he has to, I will go into that. Will I need any more than this?

I had it in my head that when I retire, I will own my house and so won't be paying rent/mortgage and so anything I get from my pension would just have to go on bills.

One final question, how do pensions work if you keep changing jobs and you have a pension with your employer? Does it just keep moving with you?

xylophone

Read whole of https://www.gov.uk/workplace-pensionsand use link to find when your employer will have to enrol you into a pension.
http://www.guardian.co.uk/money/2013/jan/14/single-tier-pension-what-state-pension-changes-mean