What Pension Plan

Danielle.j87

I am 25, and want to start a pension. But have no idea where to start! My employer is not contributing so it would just be my contributions. I am looking to invest between £50-£100 a month into a plan.

Can anyone help me with regards to who is best or which to go about?

Thanks

Lokolo

How big is the company you are working for? Companies are being phased into with auto enrolment where they are being forced to contribute.

dunstonh

I am looking to invest between £50-£100 a month into a plan.

that is low for a 25 year old. What made you pick that amount?

Lokolo's question is pertinent as all employers will have to offer a scheme by 2017.

Danielle.j87

It isn't a big company, it is a local businessman who set up a small business.

I chose that amount due to once I have paid bills etc that is realistically what I have to spare. Obviously if there is any more spare due to pay rises/bonuses etc then more will be out in the fund. I just want to know who/what type of plan is best for me.

atush

I would go for a personal pension, andlater when your employer has to make contributions, perhaps they will pay into that. Ideally, you shoud put in 12-13% of yoru salary at your age, but this can include the tax relief you will get added onto your contributions, so if you put in 100 it would become 125 in the pension- is this near to 12%?

For a personal pension, you can either DIY (see cavendishonline) or get an IFA to set one up and choose investments for you (www.unbiased.co.uk) depending on how much you know/want to learn about investing.

ferox666

dunstonh wrote: »

that is low for a 25 year old. What made you pick that amount?

Dunstonh, I greatly admire your advice that you give on these forums and have found much of it useful, and in a way I appreciate your bluntness, but that's a harsh response! Lets praise danielle for CHOOSING to start a pension. £50 a month will not produce a huge pension, true; but it's a start, and better than nothing, and if thats all she can afford, then so be it. Many people are not contributing anything. So, well done danielle!

Low-cost stakeholders are worth looking at.

dunstonh

ferox666 wrote: »

Dunstonh, I greatly admire your advice that you give on these forums and have found much of it useful, and in a way I appreciate your bluntness, but that's a harsh response! Lets praise danielle for CHOOSING to start a pension. £50 a month will not produce a huge pension, true; but it's a start, and better than nothing, and if thats all she can afford, then so be it. Many people are not contributing anything. So, well done danielle!

Low-cost stakeholders are worth looking at.

Fair comment. I was hoping it would lead to more discussion. i.e. on employer and why such a low amount. More awareness that the amount is considered low.

An awful lot of people pay small amounts and congratulate themselves for making a contribution to the pension thinking they have done what is needed. They tick the box. Then they get to retirement wondering why their £50pm they paid isnt paying them back £500. They then go on to blame the pension when in reality it was the amount that was the issue.

Low-cost stakeholders are worth looking at.

Not so much nowadays. Stakeholders were cheap in 2001 but nowadays most personal pensions can come in with lower cost.

elantan

The thing with putting money in to a pension though is you have to have the money to do so, today's wages and living expenses mean that a lot ( though not all by any stretch of the imagination) are struggling or at least don't have as much spare money at the end of the month. It's very easy to say that £50-£100 isn't enough money, and in reality it most certainly isn't enough money, but sometimes that's all that people can afford, are they better off just spending the money? or is trying to put something into a pension a better use of money ?

In my personal circumstances ( sorry to butt in op) I earn £800 a month, so the £100 I am struggling to pay every month is realistically all I can afford ( and for a long time I couldn't afford even that) am I better off still trying to pay into a pension? or should I just maybe get a couple of nights out a month ( something I currently don't get often)?

Southend1

Surely a low earner who contributes only £50 or so a month to a pension will lose as much/more means tested benefit in retirement than the pension gained?

elantan

Southend1 wrote: »

Surely a low earner who contributes only £50 or so a month to a pension will lose as much/more means tested benefit in retirement than the pension gained?

Is that something worth taking a risk on though? Goodness knows what the state pension will be like in years to come

Op you say you hope to put more into your pension at a later date, that's a very good idea, please just ensure you have realistic expectations of how much you will receive upon retiring, also can I suggest saving in an ISA as well as your pension if possible

Good luck

dunstonh

Southend1 wrote: »

Surely a low earner who contributes only £50 or so a month to a pension will lose as much/more means tested benefit in retirement than the pension gained?

What means tested benefits? Whilst some will still exist, pension credit is being abolished. Have you also seen the size of the tax benefits? It isn't something to aspire to. Do you really want to plan to live on the breadline for 20-30 years?

Someone earning less doesnt need to pay in as much. In Norfolk, a generally low earning area, people used to joke that they got a pay rise when they retired as state pension and personal provision would actually earn them more than they were when they were working.

You see people that pay more on the sky tv or mobile phones than they do into their pensions. If you priorities are right and you are putting the right budget into it based on your earnings then that is fine. If you are just putting in £50pm to tick a box and to persuade yourself that you are doing enough then that is not.