Personal Pension Scheme - too old?

F1F93

Hi all,

I am posting on behalf of my MIL2B. She is 52 at the moment, and has no idea about money. She has no savings whatsoever, and no house (she rents). She does have a pension scheme through work - she is a HCA. She has worked part time for the past five years, but is about to start full-time. Given that she'll receive her state pension at 66, she only has 14 years left to contribute to a pension. I'm worried that she won't have any savings, so if something happens she won't be able to cope.

So, is it worth her starting a private pension scheme for just 14 years to boost her income later in life, or would it be better to build up some savings first? The only problem is, if she knows she has (for example) £2000 savings, she will just waste it.
If she goes for savings, my OH and I would set up an account in her name and ask for the card so she has no access without going through us.

Both options would involve a set monthly payment.

Thanks in advance!

atush

As she already has some sort of pension, it always makes sense to have some sort of emergency cash fund in case somehting breaks down etc.

On top of that is if she would want to retire earlier than SPA (unliley in her case as she is 52 w/o a house or savings to her name). So i'd go with FT work and banking the money she earns over the PT she had before. First in cash, then once she has at least 5K in the bank then SS isas, or extra pension. Probably too late to think of buying, bet to get her into council accomodation it he next 14 years if possible.

Renting privately while retired is not a comfortable situation to be in.

F1F93

atush wrote: »

As she already has some sort of pension, it always makes sense to have some sort of emergency cash fund in case somehting breaks down etc.

On top of that is if she would want to retire earlier than SPA (unliley in her case as she is 52 w/o a house or savings to her name). So i'd go with FT worl ad banking the money she earns over the PT she had before. First in cash, then once she has at least 5K in the bank then SS isas, or extra pension. Probably too late to think of buying, bet to get her into council accomodation it he next 14 years if possible.

Renting privately while retired is not a comfortable situation to be in.

Thanks for your reply.
Only thing I'm worried about is that she has no concept of a budget - she started an expensive phone contract because she liked the phone. No idea if she could afford it, and no idea if it was worth it. Im worried that she wont be able to cope with a drop in salary when she retires, and that if she saves, she'll waste her savings and be back to square one.

atush

Well to put it bluntly, if she can't aford it she'll have to carry on!

I think you should go over the terms of her contract, tell her if she can't really afford it/shouldn't have done it and tell her you are going to help her with her budget going forwards so she will know what she can and can't afford.

First start is have her do a spending diary, she has to write down everything she spends from bus fare to a cup of tea outside the home. Then go over her fixed out goings like the phone, utilities etc and see if she can save.

xylophone

She has a defined benefit pension scheme?
Re state pension https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Over and above her pension she will need an emergency fund- is she using her ISA allowance?

Is there any possibility that she would qualify now for local authority housing?

atush

I would certainly see about getting her on the list for social housing if you can.

F1F93

atush wrote: »

Well to put it bluntly, if she can't aford it she'll have to carry on!

I think you should go over the terms of her contract, tell her if she can't really afford it/shouldn't have done it and tell her you are going to help her with her budget going forwards so she will know what she can and can't afford.

First start is have her do a spending diary, she has to write down everything she spends from bus fare to a cup of tea outside the home. Then go over her fixed out goings like the phone, utilities etc and see if she can save.

I know that, but Im not sure if she does! She bought it on a whim and is now tied in for two years. I'll make sure shes on a cheap contract afterwards. She has no concept of money - she saw the phone, wanted it and so bought it. It didn't occur to her that it might have been cheaper elsewhere.

I am in the process of sorting out her finances but she is very proud, and would much rather get into debt than ask for help (and has done before).

I have no idea if she qualifies for LA housing - I have no idea what qualifies you or not. She is single, with no dependents.

She hasnt used her ISA allowance as she can't save. If she sees she has money, she spends it, sometimes even before all her bills.

But she has just moved house and is getting a new car (so lower running costs - her old one has now broken down) so, even with the finance on the car she should be saving about £20 a month before going full time, so the increased salary will hopefully be saved.

Thanks for all your help

atush

Set up a Direct debit for her, into a savings acct on her payday each month.

One way to keep overspenders from spending.