Just a quickie! Age 22, pension, yes or no?

GoldenShadow

Thanks for all your posts everyone. Its something I know incredibly little about and find very confusing. I don't know very many people who understand much about pensions for me to ask. Most I know don't even pay into one. My Dad did, but he worked for the NHS who I understand offer very, very good pensions compared to most. He took voluntary redundancy aged 52, after nearly 30 years of service. I think he has to hold off officially retiring else he loses a % of lump sum and pension pot though...

dunstonh wrote: »

There isnt a public pension pot. That isnt how the state pension is funded.

I'm just used to the stories regarding upside down pyramid and the scaremongering that there will be very little/nothing there. As I said I literally know nothing, hence thread! Thanks

mark55man

When you understand what the choices within your pension are (and like all the others I say "go go go for it") you should come back to the forum with a question about investment strategy or fund selection.


When you are young you want more growth than security - when you are older you want more security than growth. That means as you are paying in month after month you can cope with some fluctuation as during the low months you are buying more.

sandsy

A big fat YES from me!!

michaeloswald128

mark88man wrote: »

When you understand what the choices within your pension are (and like all the others I say "go go go for it") you should come back to the forum with a question about investment strategy or fund selection.


When you are young you want more growth than security - when you are older you want more security than growth. That means as you are paying in month after month you can cope with some fluctuation as during the low months you are buying more.

I've just turned 30 and started my pension when I worked for Orange 10 years ago. I'm now with another employee pension scheme where I pay 6% and they pay 12% it's held with legal and general. I'm interested in your comment about security vs growth as I have always just chosen the lifestyle option in each pension I've joined. I know a little about pensions but not the detail of the investments etc. I suppose when I'm thinking about it I wouldn't just move money out of my bank account every month not knowing whats happening with it or where it's going and what return I should expect.

Any advice on where I could start out understanding this better and maybe looking at managing my investments or is this something I would need to devote large amounts of time regularly to?

For the OP - defo join the pension now. Main reasons for me 1.free money 2. you don't miss what you haven't had (so you'll quickly adjust to your new monthly pay).

JohnB47

I started paying into a final salary when I was 21. I had a piece of paper put in front of me to sign on my first day of employment - "do you want to pay into the pension?". " Er, well, I suppose so".

Then I forgot all about it for many years - I just didn't think about the pension payments. Now I'm in receipt of that pension and am eternally grateful that I made that decision.

mark55man

Michael


There is a book widely recommended called Smarter Investment by Tim Hale - that covers the basics of how to build a well balanced portfolio (using whatever vehicles eg pensions / ISAs / ...) for a long term investment that is both safe and likely to provide average returns. This should be an eye opener although it is heavy going


Passive investing suggests the search for above average returns always results in worse (as most investors can't handle the discipline / greed / fear). Therefore your choice of a lifestyle is not bad (although slightly depends on the provider) but you need to check the balance between bonds and fixed income (broadly conservative and safe) and equities (broadly aggressive and risky) and other types (eg properties / cash).


If you are too conservative when young (especially on a monthly investment which will pick up more when cheap) then you will not grow enough to counter inflation risk. If you are too risky when old then a last minute crash might decimate your pot just when you might consider converting it to income.


10-15 years ago the decision was more binary as you almost always went for an annuity so you needed that lump sum on the day you retired, now with Personal Pensions, and SIPPs you have other options (generally referred to as drawdown) which means you might keep your assets at risk for longer. However you still need to be careful as you don't want to start drawing on these when low - the laternative being staying at work until they recover.


Generally I would start by reading the pensions boards (retrospectively if you have time) and the Savings and Investment boards and you will pick up the look and feel of a the more experienced investors

xylophone

In your shoes I'd be signing up immediately.

atush

Oh yeah, Defo

Teaandscones

As Albert Einstein said "compound interest is like the eighth wonder of the world. Those that understand it earn it those that don't pay it". At 22, you will earn it.

Masomnia

Other factor is, if you start paying right from the off you won't notice it missing.

If they're matching your contributions definitely go for it.