30, No Pension and 14000 in Debt.. HELP

Dithering_Dad

I'm also dubious about the state pension - your partner is 30, which means he has 38 years before state pension age. Certainly enough time for several governments to come along and change the state pension rules.

On the plus side, your partner is 30, which means he has 38 years to plan his retirement!

To get the ball rolling, is he currently working? If he is, then does his employer offer a company pension/stakeholder that they would contribute to? If not, is there any way he could change jobs to join a company that does?

missile

For whatever reason your partner has spent far more than he has earned and now you need to spend less to balance the books. Short of selling a kidney or two there is no easy answer. You are in a bad situation, but at least you have recognised it and there are many in a similar situation who do not see it. Maybe this will be your first step to your first million.

You do not say how long you have been together, but hopefully you will be able to work it out together.

EdInvestor

Ali_Netball wrote: »

Currently looking to get rid of debts first but like to get a house next year.

Way to go.:)

The pension rules changed a couple of years ago, making it much easier to contribute big sums later in life.So as long as your are up to date with your NI for the 2 state pensions, better to pay off debt and then save a deposit to get a home first.

Ali_Netball

Wow, thanks for the responses, thought i'd started an argument between some of the posts there for a minute!

I appreciate there is no straight yes or no answer when it comes to pension issues and I thank you all for your advice!

In answer to some of you r questions.. he is a builder and the company he loves owrking for and has been for about 7 years does not contribute to a pension. He has only jus started getting paid holiday but he does get free health care!?!?

We have been together for just over 6 years

I already have a deposit for our house (16K which is increasing month on month) and refuse to bail him out (he doesn't want me to anyway) plus our mortgage adviser advised me against it!

DavidLaGuardia

EdInvestor wrote: »

Pensions are not the preferred tax wrapper for basic rate taxpayers with no employer contribution..

This is your opinion Ed which you have given some good arguments for, and which you have also received counter argurments. There are pluses and minuses for a basic rate tax payer having a pesion and mathematically it is still tax efficient. By all means express your opniion, but please don't present it as if it were a uiniversally accepted fact.

Anyway agree that the guy should work on debts first.

EdInvestor

Hello David,

It's not just me that holds this view.See the "Pensions vs ISAs" thread. The general view is that the 7% efficiency gain is heavily outweighed by the loss of 75% of the capital, the inability to access any of the money until age 50-55, and the strict controls on the amount of income you can take when you can access it.

Not to mention the eventual confiscation of the fund either by a lifeco due to annuitisation or by the taxman after the second death.

Since the annual "use it or lose it" pension tax alloawances were dropped in favour of a lifetime limit with a very high annual cap, there seems no point at all in a basic rate taxpayer using the wrapper early on when he could obtain much 40% higher rate tax relief on the same money just by waiting for his pay to rise.

Rather it is more efficient to use the S&S ISA - which has no restrictions at all and is lost if you don't set it up annually.

dunstonh

The thing is Ed, that it isnt clear cut.

The decision to go with pension or other (or combination) comes down to personal circumstances and opinion. For everyone where ISA is better you will have another where pension is better.

In the scheme of things, for income provision only (ignoring everything else). A pension will pay the highest income. And what is the definition of a pension? An investment vehicle that allows you to invest to provide an income in retirement. It does exactly what it is meant to do.

If you want to get more sophisticated and look at tax allowances, target incomes etc then thats when you realise that a mix and match approach is best. The majority are not that sophisticated.

EdInvestor

dunstonh wrote: »

For everyone where ISA is better you will have another where pension is better.

In the case of basic rate taxpayers on the basis of the objective facts, I disagree.People are already paying into two pensions, so often conveniently forgotten by those who want to sell them a third.

It is not wise to lock up all your savings in an inflexible vehicle like a pension from which you cannot get them out. You can achieve almost exactly the same wealth and savings effect by using an ISA ( or for that matter buying an investment property.)

Don't put all your eggs in the pension basket.

dunstonh

In the case of basic rate taxpayers on the basis of the objective facts, I disagree.People are already paying into two pensions, so often conveniently forgotten by those who want to sell them a third.

You have put everyone into the same pigeon hole again. Not everyone gets two state pensions. Plus, the tax relief on the pension gives the final fund value a 20% enhancement (as it will be from next year) and annuity rates at 65 are higher than savings accounts or the typically mentioned 5% guide.