Getting a private pension as well as company pension

hsn

Hi There,

I am on a modest salary with a small company, they have enrolled me in a work based pension (NEST) which is at 1%. Im 30 years old.

Would it be worth me also getting a personal pension on top? I know companies are obliged to offer pensions these days but my company is doing the minimum so i'm wondering if i need to have something additional as in a seperate pension or can i add more money into this existing pension?

thanks.

mgdavid

given that you will most likely move jobs several or many times before retirement it would be sensible to start your own pension in addition to anything your employer(s) offer.

atush

It could well be good for you to build up more pension, if your employer doesn't contribute much. A quick and dirty estimate is you should pay in half your age as a % at the time you start a pension (inlc employers contribs and tax relief).


It could also be worth your while, if you have extra income after you have done this, to start filling up a S&S isa. This can have similar investments like a pension, but can be accessed anytime so can help you retire earlier.

xylophone

http://www.cavendishonline.co.uk/pensions/personal-pensions/ might be worth a look.

http://forums.moneysavingexpert.com/showthread.php?p=64430672&highlight=#post64430672

jamesd

NEST is the lemon of the schemes specifically aimed at auto-enrolment so don't put in more than required to get employer contributions.

Yes, it's useful to start a personal pension as well, to get a better range of investment options without the ban on transferring in or out that NEST imposes.

Any chance of you being a higher tax rate payer in a few years, so you might get higher tax relief? Any chance of needing the money for something like a property deposit? Any desire to have several years of potential emergency money available? All of those might point towards giving investing within a S&S ISA priority for a while.

thenudeone

mgdavid wrote: »

given that you will most likely move jobs several or many times before retirement

This isn't relevant.

It doesn't matter how many employers you have. As long as you have served the minimum length of service in each one (3 months - 2 years depending on the scheme), the value of the pension you've earned will still be here after you leave, and can be transferred or taken as pension later.

The most important factor is ensuring that you have enough provision. Given that on average, people will live for decades in retirement, a pension contribution of 2% won't go anywhere remotely near providing a comfortable income in retirement. However, if (like some people I know) you have a clutch of buy to let houses, you may not have much need of a traditional "pension".

So, yes, it is an excellent idea to set up some additional provision.

mgdavid

thenudeone wrote: »

This isn't relevant.
.......

It is relevant - if the employer's scheme is non-existent or at the minimum level they can get away with and remain within the law, then you need to make some provision of your own.

thenudeone

mgdavid wrote: »

It is relevant - if the employer's scheme is non-existent or at the minimum level they can get away with and remain within the law, then you need to make some provision of your own.

If you stay with the same employer for life but only put aside 2%, you will have an inadequate pension.

If you move employers every 2 years but only put aside 2%, you will have an inadequate pension.

If you stay with the same employer for life but put aside 25%, you will probably have a reasonable pension.

If you move employers every 2 years but put aside 25%, you will probably have a reasonable pension.

The number of employers is completely irrelevant.

mgdavid

thenudeone wrote: »

If you stay with the same employer for life but only put aside 2%, you will have an inadequate pension.

If you move employers every 2 years but only put aside 2%, you will have an inadequate pension.

If you stay with the same employer for life but put aside 25%, you will probably have a reasonable pension.

If you move employers every 2 years but put aside 25%, you will probably have a reasonable pension.

The number of employers is completely irrelevant.

hardly two employers have the same Ts and Cs. If you have several employers over a career chances are you will have a mix of good and poor schemes. Therefore you need to guard against this with some private provision.
I do not see why you are trying to pick a fight with me and contradict rather than read and understand the POV of my one post. Are you just another keyboard warrior?

hsn

Thanks for all the information guys (and sorry for facilitating a fight

So I will put the minimum into this NEST pension to simply match the employers contribution.

In terms of my general finances i am a home owner with a buy to let property on the side (both with outstanding mortgages) with a reasonable amount of savings in the bank.

At some point (with kids in the future and hopefully a bigger house somewhere better than i am now) i will need access to a chunk of money. Given that the stocks and shares ISA seems more of an idea than a private pension. Although the returns on that over the next 5 years say when i need the money back maybe wont be that great as the FTSE 100 is running at pretty much as high as its ever been.

I dont copious amounts of money of course but is there any sense of doing both a private pension although when i think of it the personal pension will basically be a stocks and shares ISA that someone else is managing?

thanks again for the advice.

atush

I would not do one, I would do both. having savings and a BTL now is great, but won't replace a pension entirely. So I'd open a PP with some, and use a S&S isa with some. How to split is up to you, but given your finances I would think you would want at least 10% overall going into a pension n.


For the simple reason that 80 into your pension will become 100. 80 into your ISA will be....80. Given the years from now to retirement, that extra 20 will give you very good compounded investment growth.


So do both for the best results long and medium term.