Pensions & Savings Advice Needed

endlessnameless

Hi folks!

About me: I'm newly debt free. I am now in a position to save and prepare for my future and I'd like to make sure I set myself on the right track. I have 35 years to save. I expect my employment earnings to be in the low to mid £20k's for the foreseeable future.

Savings & Pensions: I started a Scottish Widows Stakeholder Pension Plan years ago, although the value is low (<£2k.) I had to put the pot on hold however due to paying off the aforementioned debts. I have since read some reports that highlight SW pensions as not being that great and I'm concerned.

Here are my questions:

• Would I be best to re-kick off my SW pension or look elsewhere?
• Will the incoming NEST pension be something worth opting in/out of alongside my own pot? I expect my employer to start one in 2018, at the minimum amount.
• Are tracker funds a good companion to pensions for mid sized investments for someone in my position, trying to build savings?

Any help hugely appreciated.

mgdavid

it's generally recommended that you have 3 to 6 months living expenses tucked away as an emergency fund before you start committing to savings & investments.

Mensch

I wouldn't want to give advice as I am not qualified but I can tell you that I am a big fan of SH pensions as a result of my personal situation.

I retired from teaching at 57 and, since I could not access my TP until I was 60, I had to find another job which coincidentally offered a SH pension, The agreement I reached with my employer saw 12% of my earnings going to the pension with my employer adding another 15%, and of course the state puts in its bit as well. I don't suppose there are many with such generous employers however.

So, in the last seven or so years I have contributed around 13000 (pound sign not working on my keyboard!) and my pension pot currently stands at over 48000. In one of the seven years it showed a loss of 0.3% but that has been more than made up for by two years in which it showed a rise of just over 70% whilst all other years also show an increase.

I have quite clearly been very fortunate and it may be that such returns are unlikely in future but needless to say I have been happy with developments so far.

Just watch it go tumbling in my last six months before retiring a second time!

endlessnameless

Mensch wrote: »

In one of the seven years it showed a loss of 0.3% but that has been more than made up for by two years in which it showed a rise of just over 70% whilst all other years also show an increase.

You raise an interesting point there. Some of my nervousness is based on when I was sold the pension initially. It should be noted that the meeting was just before the economic crash, but basically the guy showed me a graph of the value of stock going up over the previous years. The general sell was, with a SH pension, if you have it for long enough it will make money, regardless of the odd dip in stock market....

AlanP_2

Mensch wrote: »

Just watch it go tumbling in my last six months before retiring a second time!

Mensch - Do you have the option of moving out of equity investments and into low interest, but steadier Bonds or even cash if you are that close to accessing the pot?

Mensch

Yes, I do but now I've got a couple of other pensions in payment I'm quite happy to take the risk.

atush

endlessnameless wrote: »

Hi folks!

About me: I'm newly debt free. I am now in a position to save and prepare for my future and I'd like to make sure I set myself on the right track. I have 35 years to save. I expect my employment earnings to be in the low to mid £20k's for the foreseeable future.

Savings & Pensions: I started a Scottish Widows Stakeholder Pension Plan years ago, although the value is low (<£2k.) I had to put the pot on hold however due to paying off the aforementioned debts. I have since read some reports that highlight SW pensions as not being that great and I'm concerned.

Here are my questions:

• Would I be best to re-kick off my SW pension or look elsewhere?
• Will the incoming NEST pension be something worth opting in/out of alongside my own pot? I expect my employer to start one in 2018, at the minimum amount.
• Are tracker funds a good companion to pensions for mid sized investments for someone in my position, trying to build savings?

Any help hugely appreciated.

First of all, you check your old SW pension re the charges you are paying to SW and any fund charges for what it is invested in. this will tell you if you should bet a new PP or use that same old one. Compare at Cavendish online.

Second, yes you should join Nest when offered if just the min amt to get the Max amt your employer will pay in. Continue your PP as well.

Yes, you should have a min of 3 months spending saved for emergencies (for a start to keep you out of debt), and save extra for known upcoming costs in cash if need in the next year or two. Over 5 years before needed and you can think of investments.

Not sure what are you asking abt trackers. Trackers are a good low cost way of investing into either Pensions or S&S isas. With the proviso you pick a global tracker if choosing just one, or a mix of trackers if several as you want to cover more then just the FTSE100 or more than just the UK market. Diversification in investments is key.

You dont say how old you are, but I am going to assume 30. A good bench level to start is to invest half your age in pensions whne starting. You have already started but have less than 2K. So try to get up to 15% of salary saved as soon as possible. This can include your tax relief and eventually what your employer puts in. In your case i'd try a min of 10% now if you can and raise it each year as your pay goes up.

Another benchmark is that you should have 35K in your pension at 35. These are just rough and dirty estimates to get you thinking in the right ballpark.

endlessnameless

Thanks for the in depth reply atush, very much appreciated.

Perhaps ignore my comment about trackers for now. I think I need to focus on understanding more about the SW pension and decide if a move from that pot is necessary. I will look into the charges and the fund charges as you recommend.

atush

Actually unless you are talking a week or two, then no dont wait. Start your personal pension soon.

AS each month will tick by and yes, you will keep putting it off.

Research both the old pension and the funds available to invest in (you can switch after all) and if you want trackers and they dont have them, open a new PP that does?