Personal Pension

atush

It isn't unrealistic to ask for this- but I would ask for the % rather than the sum. As it will go up, when your wages go up?

It would be better if you upped your contribution for now if you could to around 10% if possible. Just because of your age at starting so you can build up a pot. The best performing contributions are your earliest ones as these are the ones that have the longest to grow and the most returns to compound by reinvesting.

pollyanna24

atush wrote: »

It isn't unrealistic to ask for this- but I would ask for the % rather than the sum. As it will go up, when your wages go up?

It would be better if you upped your contribution for now if you could to around 10% if possible. Just because of your age at starting so you can build up a pot. The best performing contributions are your earliest ones as these are the ones that have the longest to grow and the most returns to compound by reinvesting.

I hadn't thought of it like that. My boss doesn't have to pay towards my pension until 2017, but he kindly offered to contribute when I asked him about it. So I suppose I should be grateful with whatever he puts in. Just have to see what his payroll company suggest.


I'm part time at the moment, three days a week (but work a lot of overtime when my ex has the girls at the weekend), but might (when my girls are older) go back to work four days a week, so would be earning more.

kidmugsy

pollyanna24 wrote: »

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.

Good news! Then a reasonable target is to contribute enough to get you the maximum employer's contribution, but no more. If £100 p.m. doesn't achieve that, then you might like to consider reducing your overpayments and bunging more into the pension.

Meantime, you'll have to read up about where you might open the pension, what you might like to invest in within the pension, and so on. Oh joy!

Freecall

dunstonh wrote: »

a mortgage is cheap long term debt with interest rates typically lower than investment returns.

I would consider myself to be fairly risk-tolerant but would draw the line at borrowing money to chase higher investment returns even if that money appeared 'cheap' because the lender had the confidence of it being backed by property (ie a mortgage).

xylophone

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.

But if she fell on hard times and needed means tested benefits, this would count as capital and have to be used towards living expenses regardless of the fact that she thought of it as her pension.

bigadaj

Freecall wrote: »

I would consider myself to be fairly risk-tolerant but would draw the line at borrowing money to chase higher investment returns even if that money appeared 'cheap' because the lender had the confidence of it being backed by property (ie a mortgage).

It's down to individual choice really.

The logical thing to do is to pay your mortgage off with a tax free lump sum from your pension, as this has had tax relief on the way in and is tax free on the way out.

I've paid a mortgage off, but having taken redundancy will now probably have to move to my next job, so will probably be getting a new mortgage. Objectively what dunstonh says is correct, and what I expect to do is save into a pension to reduce or eliminate higher rate tax, contribute to isas and then look at overpaying a mortgage with any further savings.

It is very nice to be mortgage free, but you've got to run the numbers and make a decision that not only makes sense but which you're comfortable with.

The British obsession with housing often seems to mean that people overreach on mortgages, at the expense of pensions, savings and investments, and with the influence from governments fuelling this by near zero interest rates, help to buy, housing benefit for rents etc this inset going to finish anytime soon. Sorry rant over.

kidmugsy

xylophone wrote: »

But if she fell on hard times and needed means tested benefits, this would count as capital and have to be used towards living expenses regardless of the fact that she thought of it as her pension.

You must have missed "or (v) the fact that the money will not cost you any state doles before retirement age (and perhaps be safe from creditors)."

dunstonh

Freecall wrote: »

I would consider myself to be fairly risk-tolerant but would draw the line at borrowing money to chase higher investment returns even if that money appeared 'cheap' because the lender had the confidence of it being backed by property (ie a mortgage).

Borrowing to invest is high risk. However, with a mortgage you borrow the money to buy the house. You also have to pay the gas, electric water, groceries etc. There are also the consumer goods people buy each month and there is retirement planning.

All those things need taking care of. You dont stop paying one of them just because you want to pay more off your mortgage.

Freecall

dunstonh wrote: »

Borrowing to invest is high risk. However, with a mortgage you borrow the money to buy the house. You also have to pay the gas, electric water, groceries etc. There are also the consumer goods people buy each month and there is retirement planning.

All those things need taking care of. You dont stop paying one of them just because you want to pay more off your mortgage.

I've lost your thread a bit here, not sure where other living costs come into it.

I can understand your logic of having a mortgage as low interest debt and using this cash to invest at a higher return, I'm just saying that borrowing to invest is not for me.

Logically if we could all go out and borrow at 4% and invest at a 6% return we should mortgage ourselves to the hilt. That would be way beyond my risk tolerance though.

pollyanna24

My boss talked to his payroll and is putting in the princely sum of £21.54 a month towards my mortgage, so I don't think I'll have too much in my pot by the time I retire.

Aw well, hoping my girls will keep me when they are older and rich and famous!

I don't really want to use any pension to pay off mortgage as we (me and my brother) intend to have the house paid off by the time I'm 40 and then I was going to concentrate on more pension contributions. Good idea? Who knows? Probably not, but I just want to own my house and know that it can't be taken away from me.

I could always sell up once it's paid off and live somewhere nice and cheap and do something with the equity in the house? At the moment, live in South Herts, so quite expensive area in comparison to rest of country.