Pension recommendations please - with only £50 a month to put away!!

mummyemmy

I have a brilliant pension scheme, but my husband hasn't got one yet. His company don't offer a scheme.
He is 27 and will only have £50-£75 to put away each month.

We don't know where to start??

Can anyone advise us what type of pension or savings plan is best for him?:rotfl:

dunstonh

Can anyone advise us what type of pension or savings plan is best for him?:rotfl:

Not on the forum we cannot. It would be a breach of FSA rules and put the board at risk.

Generically, we can discuss which options may be suitable but as for choice of investment funds and provider, you would need to see an IFA to give you that advice or go DIY.

His company don't offer a scheme.

That should be don't YET. From 2012 they will.

So, anything you do now may be best viewed as short term to build up to the 2012 date to allow you to consider your options then.

For example, stakeholder pensions are expected to be made obsolete in 2012 with the introduction of the NPSS. So, should you start a stakeholder now or wait to join the NPSS?

The contributions is very small and rules out most of the decent pension schemes so you are really only looking at stakeholder or stocks & shares ISA.

Your husband has a state retirement age of 68. So, that is 31 years away. £75pm over 31 years @ 6% (7% minus 1% in charges - lower rate used as it is likely to be stakeholder) = £78,780. That would give a retirement income of around £4500 a year with no lump sum.

So, he would probably be better off using stocks and shares ISA for the next 5 years and then join the NPSS in 2012 which would give him far more than a stakeholder would today.

As I said, this is not advice but generic discussion on what may be the best way forward.

EdInvestor

Try opening a stocks and shares mini ISA ( up to 4k a year) with this discount broker (which will save you on charges):

https://www.h-l.co.uk

Pick say 3 funds ( I would suggest 1 UK Equity Income fund, 1 Property fund and because your husband is young, something a bit higher risk such as a Commodities fund or a UK smaller companies fund).

Put 25 quid a month in each.

dunstonh

HL minimum is £50pm per fund.

Moncs_2

dunstonh wrote: »

Not on the forum we cannot. It would be a breach of FSA rules and put the board at risk.

Generically, we can discuss which options may be suitable but as for choice of investment funds and provider, you would need to see an IFA to give you that advice or go DIY.



That should be don't YET. From 2012 they will.

So, anything you do now may be best viewed as short term to build up to the 2012 date to allow you to consider your options then.

For example, stakeholder pensions are expected to be made obsolete in 2012 with the introduction of the NPSS. So, should you start a stakeholder now or wait to join the NPSS?

The contributions is very small and rules out most of the decent pension schemes so you are really only looking at stakeholder or stocks & shares ISA.

Your husband has a state retirement age of 68. So, that is 31 years away. £75pm over 31 years @ 6% (7% minus 1% in charges - lower rate used as it is likely to be stakeholder) = £78,780. That would give a retirement income of around £4500 a year with no lump sum.

So, he would probably be better off using stocks and shares ISA for the next 5 years and then join the NPSS in 2012 which would give him far more than a stakeholder would today.

As I said, this is not advice but generic discussion on what may be the best way forward.

Can I ask how you came about that figure of £78,780?
I start a new job next week which there is no pension plan (leaving behind a Final Salary One) :rolleyes:

I was planning on starting my own private one and putting away £100 per month (I am 33) and was trying to work out how much I would get if I retired at 60 or 65

Dithering_Dad

Moncs wrote: »

Can I ask how you came about that figure of £78,780?
I start a new job next week which there is no pension plan (leaving behind a Final Salary One) :rolleyes:

I was planning on starting my own private one and putting away £100 per month (I am 33) and was trying to work out how much I would get if I retired at 60 or 65

Try this pension calculator provided by the FSA (I think):

http://www.pensioncalculator.org.uk/pages/home.php

It's quite disturbing how much you have to put away to come close to your current standard of living :eek:

dunstonh

Can I ask how you came about that figure of £78,780?

By calculating £75 pm for 31 years at 6% p.a. return.

I didnt do it my head though. I have software that does this sort of thing.

I was planning on starting my own private one and putting away £100 per month (I am 33) and was trying to work out how much I would get if I retired at 60 or 65

£100 isnt much but you have some time in a final salary scheme so that will help. As long as you increase the £100pm with inflation and give it above inflation bumps periodically and make sure its invested well, you should be ok.

Also, your state retirement age is 67. So, make sure you base your funding on that. With £100pm, you can forget about age 60 and would find 65 a hard job.

Moncs_2

dunstonh wrote: »

By calculating £75 pm for 31 years at 6% p.a. return.

I didnt do it my head though. I have software that does this sort of thing.



£100 isnt much but you have some time in a final salary scheme so that will help. As long as you increase the £100pm with inflation and give it above inflation bumps periodically and make sure its invested well, you should be ok.

Also, your state retirement age is 67. So, make sure you base your funding on that. With £100pm, you can forget about age 60 and would find 65 a hard job.

I have had my final salary pension for approx three years, so not that much at all. I also had a AVC pension with my work which again was only for three years.

With your software calculations, what would £100 per month generate me in terms of retiring at 60 or 65? Obvioulsy I plan to increase this with inflation as you mention. Also my new employer is looking to start of some sort of pension scheme soon

I fully understand that any figures you give will not be 100%, however it will be good to have some sort of idea.

I plan to retire at 60, then work part time until my state pension kicks in at 67 (well thats that plan anyway!! )

dunstonh

With your software calculations, what would £100 per month generate me in terms of retiring at 60 or 65? Obvioulsy I plan to increase this with inflation as you mention.

27 years (age 60) comes out at £78909. 32 years comes out at £112,581. (using 6% as growth rate after charges)

If you used those lump sums for income at 5% p.a. that would give a yearly pension income of £3945 or £5629 respectively.

I fully understand that any figures you give will not be 100%, however it will be good to have some sort of idea.

Yes. Your investment spread may have potential for only 5% a year or maybe 10% a year. I have gone average by using 6% after charges.

Moncs_2

dunstonh wrote: »

27 years (age 60) comes out at £78909. 32 years comes out at £112,581. (using 6% as growth rate after charges)

If you used those lump sums for income at 5% p.a. that would give a yearly pension income of £3945 or £5629 respectively.



Yes. Your investment spread may have potential for only 5% a year or maybe 10% a year. I have gone average by using 6% after charges.

Thats great, THANKS, am I correct in saying that if my new employer starts up a pension scheme which matches my contributions then I would double those figures?

dunstonh

Moncs wrote: »

Thats great, THANKS, am I correct in saying that if my new employer starts up a pension scheme which matches my contributions then I would double those figures?

More or less although you have to remember that you pay your contibutions net of tax relief and employer pays them gross. So, if you pay £100, your direct debit this year is £78 (£80 from next April). If the employer pays £100 then £100 goes in.