Pension Information for Beginners please!

WantToBeSE

Hello.

OK, so I have never really given pensions a great deal of thought, you know, I'm reasonably young (OK, early 30's, shhh) so I figured I'd worry about it later.

BUT, no more! One day I WILL (all being well) reach pension age and need to prepare for it.
The thing is, I have no idea about pensions; different types (stakeholder, personal, state), who is able to get what pension, which one I should look at etc.

I am Self-Employed too (it'll be a temporary thing, only for the next few years).

Does anyone know where I can find easy to understand advice online (or in RL) to explain it all to me?

xylophone

https://www.moneyadviceservice.org.uk/en/articles/pensions-for-the-self-employed might be worth a look.

You could try an IFA http://www.unbiased.co.uk/financial-adviser

atush

Are you paying voluntary NIcs as self employed? Or do you/will you have enough w/o? You'll need 35 years total, so get a statement of your contributions.


what savings/investments do you have now? if 0, this should come first- an emergency fund.

Do you own your own home? Do you aspire to?

WantToBeSE

I am paying voluntary NICs at the moment.
I dont have any savings/investments, but am starting as from last week.

I feel that i have made some silly choices in the past in regards to jobs/career and have never stayed in a job for very long. Never really thought of the future much, but need to now.

I dont own my own home, I rent. I would love to one day own my own home but think i may have left it a bit late?

My plan is to carry on working as self-employed for another 2 years until my youngest child is at high school and no longer needs a lot of childcare , and then get a full time 'proper' job. I aim to volunteer alongside my SE work, so that i have experience in the field i want to enter as well as the qualifications (i have a degree already).

Am also on a mission to improve my credit score, having just become debt free

atush

So, start saving. Get a fund that has at least one months spending in it, for emergencies then build it up further. Using a regular saver can help after the first small pot for better interest, then transfer to an ISA when that is full and start another (most only last a year).

WantToBeSE

Thanks Atush, looking forward to getting there.
Also, i have been looking into personal pensions, but am not sure how they work, or if i need one..any thoughts?

atush

My thoughts are, pensions are best when others pay into them for you. And you have short term goals like emergency saving, a home so they should be addressed (well at least the savings) first.
Once you have an emergency pot, you could split savings between pension/house fund if you like.

You will be offered a pension when you take up full time employment in a few years. But you'll need to save very hard to make up for lost time.

WantToBeSE

Thanks atush
Saving like mad is something i expected, so i am OK with that.
Once i get full time employment so i get the option of adding money to it from my wages every month? And is that a personal or state pension?
Sorry for all the Q's..

gadgetmind

State pension is being simplified and is based on number of years of NI contributions. As it stands, you'll get £144 per week if you have 35 years of contributions.

If you can't live on about £7500 per year, then you'll need other income and a private or company pension is a good way to achieve this.

WantToBeSE

Thanks gadgetmind,
once i have started FT work I will look in to getting a private pension..i presume i can get both state and private at the same time?

gadgetmind

WantToBeSE wrote: »

..i presume i can get both state and private at the same time?

Yes, absolutely, and changes are being made to mean that you benefit even more from even modest private pensions by removing most state pension means testing.

State pension is as above. Used to be complex, getting easier, but based on NI contributions.

Some company pensions are "defined benefit" so you earn pension in a similar way to state and get something for every year. These pensions are very expensive for the employer so now very rare outside of the public sector.

Other company pensions are "defined contribution", which means the company puts something into an investment pot to add to what you put in. What you get out depends on investment performance.

Private pensions are where only you pay into the investment pot.

Alongside the above, you can also invest in ISAs, property, etc. and how nice life is after you retire tends to depend on how wisely you salt away a few bob before this. And money invested in your 20s and 30s works harder than that in your 40s and 50s, so start early and dig deep.