Where should I put my money?

oldtractor

its all interesting but the current system doesnt apply to me. I will get my state pension when I am 66 yrs and 3 months I work it out as £127.20 ie £4.24 x 30 years. I could get the maximum of £148.40 if I add another 5 years contributions. I hope to be able to do this with my part time job.
I dont actually know they apy yet and am going for a trial shift next week but if its minimum wage which I think is £6.50 then its that x 18 hours which is £117. I'm hoping its going to be a bit more.

gadgetmind

saver861 wrote: »

So Mr A with 30 years now and Mr B with 32 years now will have the same pension under the current system i.e. £113.00 per week I think it is now. Their foundation amount will be the same ( ignoring contracted out issues etc ).

Their foundation amounts will be different because they will qualify for more under the new system.

A will get £144/35*30=£123
B will get £144/35*32=£131

After April 2016 the clock starts ticking again for both Mr A and Mr B to get to 35 years

Because of the above, it never stops ticking, unless I'm mistaken.

oldtractor

kidmugsythats brilliant!
am going to give your advice a lot of thought. the Lloyds thing is very generous.

saver861

gadgetmind wrote: »

Their foundation amounts will be different because they will qualify for more under the new system.

A will get £144/35*30=£123
B will get £144/35*32=£131

ah of course ... so that's when contracted out makes a difference.

If as in the above its all contracted in then that would be the calculations - but for those contracted out, such as myself, with 30 years, I still can't improve on the foundation amount. So even if I added two more years, the contracted out deduction means the foundation amount under the new system will still be less than the 30 years under the existing system which was where I was coming from. Again, down to individual circumstances ....

greenglide

oldtractor wrote: »

its all interesting but the current system doesnt apply to me. I will get my state pension when I am 66 yrs and 3 months I work it out as £127.20 ie £4.24 x 30 years. I could get the maximum of £148.40 if I add another 5 years contributions. I hope to be able to do this with my part time job.
I dont actually know they apy yet and am going for a trial shift next week but if its minimum wage which I think is £6.50 then its that x 18 hours which is £117. I'm hoping its going to be a bit more.

What about holidays?

Hopefully you will get paid holidays to make it easier to average to £111 per week. You don't have to get that amount every week - it is the £5760 per tax year that is the target.

If you reach the Lower Earnings Limit you will also qualify for Statutory Sick Pay.

You can earn up to £153 per week before you actually pay any national insurance - the first bit is "free"!

Note that the £153 is £153 / week for each week / month you get paid it isnt averaged over the year like the meeting the LEL for qualifying years.

The first year that would count is 2015 / 2016 starting in April 2015 - in the current tax year you won't earn enough.

You don't seem to have significant money saved as an "emergency fund". You need to build that up as well (6 months income is a common target) as money put into a pension cannot be accessed easily and shouldnt be anyway.

oldtractor

thank you GREENGLIDE I didnt know about the £111 per week until I started this thread. I will build up the emergency fund more.

oldtractor

am concerned about losing my money though. Am I right in saying that if I invest £100 a month into a pension the Gov will add £20 making it £120 invested. So the stock market would have to drop by more than 20% for me to loose out?

gadgetmind

If you put in £100, then the government will add £25 on top. This is because £125 is the "gross" amount, and you'd have paid £25 tax on that at 20%.

As for losing out, yes markets would have to fall by 25%, but you'd also have to withdraw the money at that point to lose anything. If instead you continue to pay in, then you're buying "more" with your money for when it recovers.

Of course, I don't think you've yet mentioned how long it will be before you plan to retire. If it's fairly close, then you need to invest in assets that are less volatile, such as bonds and even cash. If it's closer to ten years away, then a portfolio of shares, property and a decent chunk of bonds would be more appropriate.

Most pension companies will have suitable portfolios and also the ability to "lifestyle" you into less volatile assets as you approach retirement.

saver861

oldtractor wrote: »

. I could get the maximum of £148.40 if I add another 5 years contributions. I hope to be able to do this with my part time job.

I dont actually know they apy yet and am going for a trial shift next week but if its minimum wage which I think is £6.50 then its that x 18 hours which is £117. I'm hoping its going to be a bit more.

There are other ways of making up additional years if it does not work out with the job. If the job is new and you have to do a trial etc you might need a little time before committing to anything.

You can make additional voluntary contributions to top up the pension. However these are £13.90 per week so a tad expensive if you are on a low income.

The other option is to set up as self employed and contributions then are £2.75 a week for earnings up to a certain amount.

xylophone

Your husband's employer does not provide a pension?

Your employer does not provide a pension?

https://www.gov.uk/workplace-pensions - see auto enrolment.

If earnings are below the threshold see

http://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment

"No. You will NOT be automatically enrolled into your workplace pension scheme if:

You don’t meet the eligibility criteria; or
You’re already in a workplace pension scheme that meets the Government's standards
If you are not eligible, you might have the right to opt into your employer's workplace pension scheme and your employer might pay into it too, but they don’t have to, so you should check this with them."