Suggestions for DC pension to supplement small DB pension

bridgend_girl

Aged 47. Working full time as teacher in Teachers' Pension scheme. Currently have old LG pension forecast of £250 pa payable at 60 (may have changed but hope not). Teaching years to date in pre 2007 scheme only 5; predicted pension of about £1600 pa. Have bought £500 pa additional benefit outright and am paying towards £3800 over 14 years (approx £400 pcm). I receive tax credits and earn £25500 pa less monthly pension contributions of approx £550 pcm. I am trying to get a decent pension but have started very late in life. Mortgage only £18k left which I overpay when I can.

My question is how best to use the annual pay rise I will get on 1st August. I want to set up an additional pension payment of approx £180 pcm gross but don't know what to invest in. Some sort of DC pension that I may be able to use to bridge the years between ages 60 to 67 when I will have a partial pension perhaps?

Suggestions eagerly received as a real dummy regarding these things.

Thanks

kidmugsy

What interest rate are you paying on your mortgage?

Have you had a forecast for your State Retirement Pension?

bridgend_girl

mortgage rate 2.99% only £50 pcm interest as balance so low. Plus I understand that pension payments are effectively subsidised by tax credits too. Unsure what the actual rate of benefit is but it's something!!:D

Did get forecast but it was a few years back. Has lots of qualifying years. Good idea need to get more up to date one.

jamesd

Yes, pension contributions reduce pay for tax credits calculations. Mortgage overpayments don't. So best to switch from mortgage overpaying to higher pension contributions.

Also try a pension credit calculator to see what happens if you increase pension contributions a lot more. Do you get all of the extra pension contributions replaced by [STRIKE]pension[/STRIKE] tax credit? If so, that's a great deal for you.

greenglide

Also try a pension credit calculator to see wht happens if you increase pension contributions a lot more. Do you get all of the extra pension contributions replaced by pension credit? If so, that's a great deal for you.

The OP is 47 so pension credit is clearly inappropriate. Did you mean tax credits which are already being claimed?

jamesd

Yes,. the use of pension in the second para was wrong, the use of tax in the first was right.

atush

I would stop overpaying such a low mtg at your age and under 35(but still high I pay only 1%)

Pay into a DC pension. this will fund early retirement before your TPS pension pays out unreduced.

Unless you have a large emergency cash fund, I would consider saving as well into a S&S isa as this would allow you to use it for retirement/early retirement but also fund any capital needs pre retirement.

bridgend_girl

Thanks. No tax credits isn't pound for pound; would be marvellous if it were. Have approx £5k cash reserves. Am nervous of going above this as my workplace has been reducing staff and compulsory redundancy is a possibility also am nervous of having too much in savings with the dreaded universal credit coming in. Want to still qualify for income support/council tax help should I become unemployed.

I know that mortgage overpayments are less financially savvy but do love the prospect of being MF as it's such a millstone. As single Mum of 3 dependent kids and another at Uni, having debts worries me should I get ill or out of work. In the last 8 years I have been made redundant before, divorced and long term ill (though all sorted now). So have been through very hard times financially.

So what sort of pension should I be looking for please?

atush

It depeonds on what you want to invest in, if you even know or want to hrie an IFA to sort if for you.

For a start look at HL.co.uk and cavendishonline.

Decide how much you will pay in, and if doing it yourself choose a global fund/tracker or a lifestyle fund like the vanguard series.

bridgend_girl

Lost already. Looking to pay in about £150 a month on a regular basis. Would quite like to make occasional adhoc payments too if that was possible. Owed a few thousand in CSA arrears which occasionally give me some extra income. First payment this year was £580 then £6.74 (!!) then nothing since. You get the picture.

Wouldn't have a clue what to invest in or the jargon involved. Know I want 'flexible' draw down at other end though, hope this is the right phrase.

thanks

Is an IFA worth the expense? How much is the expense?

atush

It depends, you can get some quotes from local ones at unbiased.co.uk.

Or you could like i said, choose a vanguard fund (they go from 100% to 80, 60, 40, 20% equities depending on how you view risk (but I'd go min 80% if you have a DB pension as that is no risk to you) or a global tracker fund (these are cheap and well diversified) until you have say 20K in your pot if the fees the IFAs want are too high?