Pension for 25 yr old.

ipri

I'm trying to get my son interested in sorting a pension out...he doesn't have any real interest. He's heard stories about schemes collapsing just before payout due!....As I have. Are rules about such things different now? thanks

somethingcorporate

Stories from who and where? Hearsay, down the pub from people that will no-doubt end up poor in their retirement, justifying their reasons for not saving for their old age.

I will let some of the experts provide the background to the securities now in place but the type of scaremongering you often hear is similar to that of anti-vaxxers. Recycled, old and inaccurate news.

xylophone

Does his employer provide a scheme?

https://www.gov.uk/workplace-pensions

ipri

So, where does he start?....Banks / B. Societies? He works in a hotel, aren't they supposed to offer access to advice? thanks again.

hugheskevi

He's heard stories about schemes collapsing just before payout due!....As I have. Are rules about such things different now?

Yes. Everything changed in 2004 with the introduction of the Pension Protection Fund which took over the hastily introduced Financial Assistance Scheme which dealt with pensions where employers became insolvent after 1997.

But risk of sponsor failure significantly affecting pension only applied to private sector Defined Benefit schemes, which he is unlikely to be offered.

Never understand the willingness of folk to believe stories from over a decade ago which have profound implications for their financial well-being without doing their own research, especially when a few minutes of internet research would give everything needed...although I did hear something about pots of gold guarded by leprechauns over in Ireland, I reckon I might have to sort a trip over there, it was a great story...

So, where does he start?....Banks / B. Societies?

Anywhere but there, you'll probably come across Virgin pension, avoid them too.

Firstly, is a pension the right vehicle for him? Would he be better off saving in other forms, and particularly investment ISAs? Or saving for a house deposit, or reducing expensive debt?

Have a look through Cavendish Online as a starter for seeing what sort of personal pensions and charges are available if following the above it is decided that a pension is a suitable vehicle to use.

He works in a hotel, aren't they supposed to offer access to advice?

No, they are not allowed to advise although they could facilitate access to advice. They must meet automatic enrolment rules, but the employer may not yet have reached the date at which they must provide workplace pensions to their staff.

Fruit_and_Nut_Case

Show your son this picture...

http://www.web40571.clarahost.co.uk/archive/talks/pix/20070520.jpg

atush

ipri wrote: »

I'm trying to get my son interested in sorting a pension out...he doesn't have any real interest. He's heard stories about schemes collapsing just before payout due!....As I have. Are rules about such things different now? thanks

My son turned 24 last week, and already has 6K in a pension. So thankfully not all our youth are as ill informed?

Basically, pensions carry investment risk so could drop if they are invested in high risk funds or single shares, but the days of Maxwell spending his employees pensions and Equitable life giving our guarantees the4y can't fulfill are long gone.

Not only would his money be ring fenced from theft, it is safe from court judgements (except maybe on divorce where it could be split) and from means testing should he be out of work.

Tell him to join his employers scheme forthwith.

atush

ipri wrote: »

So, where does he start?....Banks / B. Societies? He works in a hotel, aren't they supposed to offer access to advice? thanks again.

His employer, under the law, must start an employee scheme soon. he should join it. In the mean time, he could invest in a PP via cavendish online and choose a lifestyle fund- a mix of global equities and bonds, or a range of trackers.

the LAST place to go is to a bank.

ipri

Seems he was enrolled in the "nest" scheme in his last job...but only for a short while. Would this not automatically transferred with him...or should he have sorted it?

xylophone

Is his current employer using Nest?

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/whatIsNEST/contents/main-features.html

If not, does the current employer use another pension arrangement?

https://www.gov.uk/workplace-pensions

somethingcorporate

atush wrote: »

My son turned 24 last week, and already has 6K in a pension. So thankfully not all our youth are as ill informed?

Basically, pensions carry investment risk so could drop if they are invested in high risk funds or single shares, but the days of Maxwell spending his employees pensions and Equitable life giving our guarantees the4y can't fulfill are long gone.

Not only would his money be ring fenced from theft, it is safe from court judgements (except maybe on divorce where it could be split) and from means testing should he be out of work.

Tell him to join his employers scheme forthwith.

I did the same at 24 as a young, pretty naive graduate. My Dad gave me a good talking to.

Having just turned 30 I now have around 60k in my scheme and my wife aged 29 has about 40k in hers. That's a lot of income we have sacrificed over the last 6 years but then again it's worth it to avoid living in poverty when (if) we reach our old age.

Out of my ~60k more than half has been growth/tax relief/employers contribution.