Personal Pension

pollyanna24

I'm still dithering about getting a pension, but if I take out a pension with a well known company, do I have to stick with it forever?


Also, if I decide to only put in £100 a month for now, can I increase this at a later date?

Also, when it comes to the time when I'm retiring (not for another 30 years or so), can I take the money in my pension pot and buy an annuity anywhere I like or do I have to stick with the company that I've been paying my pension into over the years?

dunstonh

but if I take out a pension with a well known company, do I have to stick with it forever?

no

Also, if I decide to only put in £100 a month for now, can I increase this at a later date?

yes

Also, when it comes to the time when I'm retiring (not for another 30 years or so), can I take the money in my pension pot and buy an annuity anywhere I like or do I have to stick with the company that I've been paying my pension into over the years?

You can do any of the income options with anyone you want.

One observation, you mention 30 years or so which suggests you are in your 30s. £100pm for someone in their 30s is low.

kidmugsy

Saving for old age is wise. Doing it by opening a pension may not be wise.

The things that make a pension worthwhile are (i) employer's contribution, or (ii) avoidance of higher rate tax, or (iii) ability to do by salary sacrifice, or (iv) ability to exploit unused personal allowance when drawing the eventual pension, or (v) the fact that the money will not cost you any state doles before retirement age (and perhaps be safe from creditors).

If none of these apply, you might be wiser to save otherwise - e.g. in ISAs - and then switch the funds into a pension when the criteria do apply to you.

Before you save for old age at all, it'd be sensible to get rid of any expensive debt, and build up an emergency cash fund.

pollyanna24

dunstonh wrote: »

no



yes



You can do any of the income options with anyone you want.

One observation, you mention 30 years or so which suggests you are in your 30s. £100pm for someone in their 30s is low.

Thank you. Yes, I am 32. I know it is low, but we all have to start somewhere!


I am concentrating on paying off my mortgage by the time I am 40 and hopefully will significantly increase my contribution at that stage, if not before, when my childcare costs go down as my children are young at the moment.

pollyanna24

kidmugsy wrote: »

Saving for old age is wise. Doing it by opening a pension may not be wise.

The things that make a pension worthwhile are (i) employer's contribution, or (ii) avoidance of higher rate tax, or (iii) ability to do by salary sacrifice, or (iv) ability to exploit unused personal allowance when drawing the eventual pension, or (v) the fact that the money will not cost you any state doles before retirement age (and perhaps be safe from creditors).

If none of these apply, you might be wiser to save otherwise - e.g. in ISAs - and then switch the funds into a pension when the criteria do apply to you.

Before you save for old age at all, it'd be sensible to get rid of any expensive debt, and build up an emergency cash fund.

Thank you.


My only debt is my mortgage. My boss has agreed to contribute to my pension, but not sure of how much yet. He is going to ask his payroll what is standard.

atush

The OP will be getting an employers contribution (from her other posts) so saving in a pension WILL be wise. AS it can be with Many people.

atush

pollyanna24 wrote: »

Thank you.


My only debt is my mortgage. My boss has agreed to contribute to my pension, but not sure of how much yet. He is going to ask his payroll what is standard.

What % is your mtg? If it is low like many these days, I would concentrate on t he pension more for now. You can change priorities later, if and when rates increase.

pollyanna24

atush wrote: »

What % is your mtg? If it is low like many these days, I would concentrate on t he pension more for now. You can change priorities later, if and when rates increase.

2.5% and will never go 2% above Bank of England rate.


I own the house with my brother and we have committed to paying the same amount each month.


Why would it be better to concentrate on the pension now and house later? I thought it was best to just get rid of the mortgage as quickly as possible rather than waiting for rates to rise?

dunstonh

Why would it be better to concentrate on the pension now and house later?

Investment returns tend to be better than interest on mortgages over the long term. Investments go up and down and risk is diluted over time. People who buy investments through downturns tend to make more money (as they buy their investments cheaper). The longer the period, the more downturns that will exist.

I thought it was best to just get rid of the mortgage as quickly as possible rather than waiting for rates to rise?

No. Its best to get rid of expensive short term debt as quickly as possible but a mortgage is cheap long term debt with interest rates typically lower than investment returns.

chelseablue

My employer pays 8.5% of my salary into mine

pollyanna24

chelseablue wrote: »

My employer pays 8.5% of my salary into mine

Thanks for this. My wage isn't the same every month as I work overtime when my ex has my daughters.


I've worked out though that on this years wages (going from April 2013-April 2014), if my boss puts in £100 a month, it will work out between 4-5% of my wages. Not sure if this is unrealistic or not.