Pension advice - I'm nearly 30 and have NO pension!

AleMrsT

Hi,

As the title suggests, its coming up to my 30th birthday and I currently have NO pension or life insurance.
I am clueless when it comes to pensions and have no idea where to start or what the best options are. Where is the best place for me to go to get some information and advice? I have asked my employer about the work pension, but there isnt currently a pension scheme, I don't think there will be one coming in until next year. I have previously had a pension through an employer, but I have no idea what would have happened to this when I changed jobs, who it is with or where I find the information. Would I still be able to pay into this myself if I can find the information of who it was with?
I can no longer get life insurance cover due to my medical history. We don't have any children and we rent our home, so life insurance isnt too critical, but I'm concerned that I'm going to end up with no money at all when I retire.
Sorry for all of the questions, and thanks in advance for any help and advice.

AlanP_2

Step 1 - Find your employers "staging date" at http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx.

This will give you the date when they must start offering their employees a scheme.

Step 2 - Contact your old employer to find out about the previous pension, unless you can find any old paperwork / emails anywhere.

Depending on the answers to these you can start to look at your options going forward.

Does your partner know what their pension situation is?

I can't see that you will end up with nothing as there will at least be some State Pension and there is the previous employer scheme. They may not add up to much but better than nothing.

Playing_with_Fire_2

Don't worry too much about life insurance for now, unless your partner is financially dependent on you.

Do you have savings of any sort? A Pension is basically an account for saving for retirement that you can't access until a specific (currently unknown) age. There is a difference that you are more likely to invest in a pension rather than get a fixed interest rate. There is a strong tax advantage if you are a higher rate tax payer and a more modest tax advantage if not (this is likely to change in the next year or so).

A rule of thumb is that you need to save half your starting age in % of your wages for retirement. For you that would be 15% of your wages.

Workplace pensions have an advantage that you will save national insurance and your employer will also pay into your pension.

I would suggest that you (straight away) start saving every month, aiming for 15% if you are saving nothing, or adding 15% if you are already saving (saving for a planned car replacement or holiday doesn't count here). This can go into a savings account, it doesn't need to be a specific pension account (you can move it into a pension later).

I don't need to know the details of your medical condition, but if it is likely that you might need to stop work before about 63 but have a normal life expectancy, you might want to think about keeping more in a savings account such as an ISA rather than in a pension.

When your employer starts the pension, have a look at the information and come back to this forum. We will probably tell you to contribute at least enough to get the maximum employer and government match available.

Then think about what you want from retirement, how much would the state pension give you and do you think it will be around in 38/40 years? Do you plan to always rent? Do you need certainty in how much you have each year and that it will last as long as you do?

If you want to save more for retirement (highly recommended), you can open a pension for yourself, or put in more to the employer's pension. There will be benefits to both. You probably won't be able to pay into your old work pension, but you can find out by emailing the HR department and asking them who the pension administrators are.

Pension Advice Service and nidirect both have good pages explaining the basics of pensions.

Pensions can seem complicated but if you go and have a read and think about what you want then you'll know what to do. It may be hard to make extra savings in your budget, but your future self will thank you!

atush

Find your old pension as said. Make sure you have emergency cash between you of 3 months outgoings.

then look at t a pension and S&S isas. You may or may not be able to pay into the old pension, as some employer pensions get changed to personal ones once you leave. But you have to find out.

MDMD

Playing_with_Fire wrote: »

There is a strong tax advantage if you are a higher rate tax payer and a more modest tax advantage if not (this is likely to change in the next year or so).

Although it is possible the government could move to a flat rate over the next year or so, we'll see what the chancellor announces next month.

Playing_with_Fire wrote: »

Workplace pensions have an advantage that you will save national insurance and your employer will also pay into your pension.

The NI saving only applies if your employer operates salary sacrifice, not all of them do. If you are HR the NI saving is only 2%.

atush

given everyone has a Personal allowance against tax, which is greater than the state pension (new or old) then there is no reason to NOT have a pension, as it might be that 100% of it would be free of tax?

25% tax free pus drawing down the rest each year to the amount of the current PA?

gadgetmind

atush wrote: »

given everyone has a Personal allowance against tax

Sorry, not quite right, the personal allowance is means tested, and I haven't had one for several years.

jem16

gadgetmind wrote: »

Sorry, not quite right, the personal allowance is means tested, and I haven't had one for several years.

Do you expect to have more than £100k in retirement?

gadgetmind

jem16 wrote: »

Do you expect to have more than £100k in retirement?

It depends on how long I work, how hard I draw down the pension, what other income I have, and also whether HMG lower that £100k. Remember, tapering personal allowance rapidly towards zero was dropped on us with no warning, and reducing this to £75k or even £50k could be done just as quickly.

gadgetmind

BTW, I accept that it's moot in the light of this thread, but the misconception that everyone has a personal allowance is widespread, so I'm just doing my (ongoing) bit to correct it.:)

atush

Yes, high earners dont get a PA, I do know this.

But it is only the VERY highly paid that dont. And most of those wont be so highly paid in retirement even if they are now. So really for the purposes of this and most discussions, it is moot.

My comment was they have NO pension, and some posters were saying as a BR taxpayer there isn't much point. But there is a point.