Pension plan?

jlg1

Hi everyone,

I hope Ive posted in the right place.....

I just had a general query that some of you might be able to help me with..

I'm a music tutor (self employed) and have been paying into a personal pension plan with Scottish Life since 2006 approx £90 per month (government adds £20 approx. for their part of it). Ive been taking premium paying holidays at least 3/4 months of each year due to lack of wok over the summer months.

The (90 approx a month is a big chuck to be paying in - SL have told me that figure is the minimum I can pay in each month...

I am wondering is it wise to keep paying into this as there have been various bad reports on pensions not being worth much come maturity etc...

Just wanting some advice or your thoughts on this and pensions of these types in general....?

Thanks for any help,

J

latecomer

You might be better posting on the Pensions board:

http://forums.moneysavingexpert.com/forumdisplay.php?f=19

MEM62

If you are thinking about not paying into a pension I assume that you have other financial investments that will see you through retirement? For most people there is no more efficient way to save for retirement but, of course, peoples circumstances are not all the same so perhaps you should speak to an IFA. One thing is for sure, it will be a bleak retirement if you end up relying purely on the State pension :-(

FatherAbraham

jlg1 wrote: »

I am wondering is it wise to keep paying into this as there have been various bad reports on pensions not being worth much come maturity etc...

Please provide a link or reference to these reports which are causing you disquiet, so we can assess their quality. It sounds unlkely to be true.

jlg1 wrote: »

The (90 approx a month is a big chuck to be paying in - SL have told me that figure is the minimum I can pay in each month...

Yoy could contribute less if you used a stakehold pension, which must accept intermittent payments of £16 nett (grossed up to £20 by the tax relief). Using a discount broker can get you a cheap stakeholder; beware of full-price stakeholder pensions which can charge 1.5% of your funds per year.

Warmest regards,
FA

princeofpounds

I am wondering is it wise to keep paying into this as there have been various bad reports on pensions not being worth much come maturity etc...

There is lots of poor media reporting of this issue. Most pensions are not 'bad', and very often when they are it's because people have unrealistic expectations for the contributions they made, or made no attempt to actually find a competitive product.

There are several very different types of pensions out there, and tarring them all with one brush is not right.

However, the main benefit of pensions is tax avoidance (or really, deferral). Sometimes it's also to gain an employer's contribution.

If you don't pay a lot of tax then you might benefit from having more flexible arrangements like ISAs.

Anyway, the bods on the pensions board should be able to help.

dunstonh

I am wondering is it wise to keep paying into this as there have been various bad reports on pensions not being worth much come maturity etc...

There have been no such reports. What you tend to see are people who have paid in peanuts expecting to get a fortune. They are only as good as what you pay in to them. The media is rubbish at pension reporting.

In your case, you are paying in the minimum contribution and only on a part time basis. So, in that respect, you wouldnt expect a big pension. However, the pension it still better than any conventional alternative when it comes to retirement income provision.

jlg1

Thanks for all the replies.... I knew I'd posted this in the wrong place...sorry for that....but in the meantime all advice is appreciated...

I'm aware I'm opting out of making contributions at least 4 months of a year - that's simply because of my work and the lack of income over the summer months once schools finish (if) I cant get any home lessons.

I was worried about the long term effects of doing this every year, so I might look into making sure I pay in at least 10 months of each year....

I'm not well up on the various types of pensions to be honest and when taking this one out talked to a FA from Grosvenor Financial Services at the time back in 2006.

I might look into the other various types even if its just to get a bit more clued up on the options...

I've friends who are self employed and their attitude is to "live for now", "paying that month is crazy" as you never know what the future holds BUT if anything doesn't happen when I hit 65 I'd like to have a nice sum to work from....:)

Thanks for the help,

I'll shift this to the pensions board....:)

J

R_P_W

You don't say how old you are, but £90 a month really isn't a lot to put away for retirement I'm afraid (especially if you are not doing it everymonth). Unfortunately if you don't have the income to pay in more I'm not sure what to suggest

dunstonh

I've friends who are self employed and their attitude is to "live for now", "paying that month is crazy" as you never know what the future holds BUT if anything doesn't happen when I hit 65 I'd like to have a nice sum to work from....

4 out of 5 men will make retirement. Self employed dont qualify for full state pensions (under current system). So, they are looking forward to just over £5000 a year state pension. Their older self wont thank their irresponsible younger self.

BUT if anything doesn't happen when I hit 65 I'd like to have a nice sum to work from.

Chances are you wont be able to retire at 65 (unless its in the next few years). State pension age at the earliest is most likely. Bar winning the lottery.

jlg1

R_P_W wrote: »

You don't say how old you are, but £90 a month really isn't a lot to put away for retirement I'm afraid (especially if you are not doing it everymonth). Unfortunately if you don't have the income to pay in more I'm not sure what to suggest

Hi,

I'm 41 at present.

Just spoke to Scottish Life today - they had mistakingly taken a payment out for April even though I am on a payment holiday at present...?

They also told me I could reduce the figure per month if need be despite in the past telling me I was already paying the minimum?

To be honest they do not seem very reliable every-time I phone I'm told something different?

jlg1

R_P_W wrote: »

You don't say how old you are, but £90 a month really isn't a lot to put away for retirement I'm afraid (especially if you are not doing it everymonth). Unfortunately if you don't have the income to pay in more I'm not sure what to suggest

The problem for myself is - I teach in local schools - when they close for the summer I have no daytime work for 2 months - hence the payment holiday every year.

I spend the year saving for my summer wages which is a big burden every year - getting daytime music lessons over the summer months is always a struggle as many are more keen to go on holiday and parents are still working during the day so kids cant get to lessons.

Its a real pain every year to get those summer wages sorted.

I'd like to pay into the pension all year round if I could...I was thinking of lowering the summer amounts and then pay month once Sept/Oct comes round again..need to add a few things up and see how it looks...

James