Almost 21 Years Old, I Want To Start A Pension Now

atush

kteara wrote: »

I save 500 a month for the possibility of owning a nice house one day. So the waitrose pension is out of question, what is the best pension I an pay into? If I pay in 100 a month what sort of returns can I expect to receive?

AS peaceful and xylo have said, DO join the waitrose pension and no other until you have enough income. As they are doubling your money, and your contribution will save you income tax and Nics.

Save the rest for your eventual property purchase/emergencies. This money should in the main be in cash, although if you expect your property purchase to be 5 years+ away, you could consider a S&S isa for a part of that savings.

AS for owning a 'nice house' look for one by all means. But any house/flat is a good starting point. You buy what you can afford and look to move to the 'perfect' house later?

atush

kteara wrote: »

I have looked on the Waitrose internal website and it says that I need to be 22 years of age before I can contribute to the DC Pension.

It also says it will only match up to 4.5% of contributions



The page was last updated on the 19/12/2013 however, so I'm unsure if the 4.5% is true or not but the minimum age of 22 is correct. What should I do?

What I would do is contact them on monday and ask. And I think the new auto enrollment rules mean they can't say 21 yr olds cant' join?

xylophone

And I think the new auto enrollment rules mean they can't say 21 yr olds cant' join?

https://www.gov.uk/workplacepensions?gclid=CNDtg52p-MICFUFf2wodWl0AVQ

The link above indicates that a company only has to enrol those who are 22 or over and earn more than £10000 a year.

Presumably younger workers can join at a company's discretion?

The OP needs to ring HR and find out the position.

If he cannot join the scheme, then he can either start a pension of his own if he wishes http://www.cavendishonline.co.uk/pensions/ might be worth a look, or set up an account where he can set aside the £100 a month and use the money to contribute to a workplace pension when he has the opportunity to join.

He might try to open a TSB Classic Plus. http://www.tsb.co.uk/current-accounts/

p00hsticks

princeofpounds wrote: »

Hi welcome.

Don't know where you got the idea pensions get taxed at 75%.

The OP actually said that "I was previously against the idea due to the notion of 75% of it being taxed."

I suspect that they've picked up on the headlines about being able to get a tax free lump sum of 25% from your pension and extrapolated that 75% is therefore taxed - which it may be, but is not a big deal when, as you point out, you get tax relief on the money going in and will have a tax allowance to use against at least part of your pension on retirement.

kteara

p00hsticks wrote: »

The OP actually said that "I was previously against the idea due to the notion of 75% of it being taxed."

I suspect that they've picked up on the headlines about being able to get a tax free lump sum of 25% from your pension and extrapolated that 75% is therefore taxed - which it may be, but is not a big deal when, as you point out, you get tax relief on the money going in and will have a tax allowance to use against at least part of your pension on retirement.

I'm slightly confused about the tax relief part. You're allowed approximately £10,000 a year tax free right, so if you earn £13,000 but contribute £3,000 to a pension, where is the tax relief benefit ?

ViolaLass

kteara wrote: »

I'm slightly confused about the tax relief part. You're allowed approximately £10,000 a year tax free right, so if you earn £13,000 but contribute £3,000 to a pension, where is the tax relief benefit ?

In that case, the tax you would have paid on that £3k would go into the pension instead of to the tax man.

kteara

ViolaLass wrote: »

In that case, the tax you would have paid on that £3k would go into the pension instead of to the tax man.

Oh!, now I understand. So the tax you pay, you get to keep in the pension?

xylophone

I'm slightly confused about the tax relief part. You're allowed approximately £10,000 a year tax free right, so if you earn £13,000 but contribute £3,000 to a pension, where is the tax relief benefit ?

If a person has no earned income up to £3660 gross may be paid annually into his pension scheme.


He pays £2880 to the pension provider and the pension provider claims £720 from HMRC which is added to the pension.

If a person has earned income ( even if his earnings are below the tax threshold), he may pay a sum equal to his income net of basic rate tax into a pension scheme and the provider will claim back the basic rate tax and add it to the pension.

For example, if a person earned £6000 a year, he could make a contribution of £4,800 to his pension and the provider would claim£1200 from HMRC.

See here http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0432

"Basic rate taxpayers pay net contributions to personal pension
plans. The member pays 80% of the gross contribution, with
the provider adding the 20% tax relief and claiming this back
from HMRC. The total value of tax-relieved contributions
in the tax year cannot exceed the member’s relevant UK
earnings or £3,600 if their earnings are lower than this. This
allows non-taxpayers and starting rate tax payers to benefit
from 20% tax relief on pension contributions despite paying
income tax at a lower rate or not at all. Higher and additional
rate taxpayers claim the additional tax relief that they are
entitled to through their self-assessment or by an adjustment
to their tax code.

Where a pension scheme operates on a net pay basis, the
contribution will be deducted from salary before income
tax (but not national insurance contributions) are deducted.
Income tax relief at the member’s highest marginal rate is,
therefore, available at source.

kteara

Hi all,

I have just finished my conversation on the phone with the John Lewis head office. It seems I'm able to start a pension now because they said they will send the forms to my house, they didn't ask for my age?

However, they did confirm that john lewis can only match my contributions up to 4.5% I'm not sure where the lady on the phone got her figures from but it was around £40ish pounds a month? Slightly confused here but can anyone on here make any sense of this? thanks!

xylophone

they didn't ask for my age?

But as you wanted to know whether your age affected your ability to join the scheme you should have done?

However, the literature is on its way to you and should clarify - if it doesn't you'll need to ring again.

If you are able to join, the matching contribution is 4.5% of salary- does the £40-ish more or less equate to this?