What to do when unemployed?

lolamancity

Hi there. Today's budget announcement of the 'Lifelong ISA' has got me thinking about what I need to be doing in terms of my pension, and I was wondering if anyone could give me some advice?

My background is that I am now 32, and from the age 18-30 I paid into a Local Government Pension, although my salary wasn't huge. I was made redundant whilst on Maternity Leave, then got another very poorly paid part time job and paid again into a LG pension before becoming unemployed again. I am now staying unemployed for the forseeable - I am a carer receiving carers allowance for my youngest son, and as my partner earns a decent'ish wage, I can afford to take at least a few year's of not working. I had a bad experience in my last short job, and as well as leaving me very anxious I had to admit to myself that I don't know what I want to do career wise so I'm now starting to worry about uncertainty in life- particularly my continuing lack of pension.

I have forced my partner to pay into his company pension a few years ago, and unbeknown to me, he was paying absolute pennies into it so he's now upped it dramatically... But what about me? As of next year, my son will be in school and we recently bought our rented house paying less mortgage than we were paying in rent so we will have a bit of extra cash. Could anyone advise me what I could do to replace my lack of company pension? Would the new Lifelong ISA be the best bet? Or is there another alternative?

Many thanks

HappyMJ

Whilst you're unemployed you are best spending your time looking for work.

Your post doesn't sound like you're looking for work though so the technical term for you is "not in employment" rather than unemployed. Unemployed implies you're looking for work.

When you get a job again you can start making contributions again.

Your partners pension is your pension too. You're entitled to half of it.

Too early to comment on ISA changes.

Myself.....I save into regular saver accounts earning 6% interest. I would also pay off debt before saving so if you've got a mortgage get that paid off before saving.

xylophone

You have a deferred pension with LGPS?

Even as a non-earner, you can pay up to £2880 per annum into a pension and receive tax relief - a simple stakeholder might suit for the time being.

http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

When you return to employment, you can contribute to your employer's pension scheme.

lolamancity

Sorry, didn't mean to mislead... Almost certainly not looking for work within the next 2-3 years. When I do, I will probably end up in a very poorly paid part time job to fit around school hours for at least the next 10 years. I think this is why I'm fretting, because my pension potential is absolutely garbage and makes a bleak outlook. But if I could soften that by replacing it with something else, id feel less worried. We'd almost certainly have our mortgage paid off before the 25 year term. Are high interest savings accounts the way to go then?

lolamancity

xylophone wrote: »

You have a deferred pension with LGPS?

Even as a non-earner, you can pay up to £2880 per annum into a pension and receive tax relief - a simple stakeholder might suit for the time being.

http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

When you return to employment, you can contribute to your employer's pension scheme.

I'm actually not sure what's happened with my LGPS... They were messing about with the 2 separate ones I paid into the last time I spoke to them (as both my employers didn't complete the paperwork they were supposed to) bu it is deferred.

I will have a look at that link... Thanks!

HappyMJ

lolamancity wrote: »

Sorry, didn't mean to mislead... Almost certainly not looking for work within the next 2-3 years. When I do, I will probably end up in a very poorly paid part time job to fit around school hours for at least the next 10 years. I think this is why I'm fretting, because my pension potential is absolutely garbage and makes a bleak outlook. But if I could soften that by replacing it with something else, id feel less worried. We'd almost certainly have our mortgage paid off before the 25 year term. Are high interest savings accounts the way to go then?

They aren't "the" way to go. It's just one part of everything. 6% is a pretty good interest rate not much can beat it so you may as well save as much as you can in them and when the funds mature in 12 months you can figure out what to do with the money then.

If you've got spare household income then your working partner may get more benefit than you by increasing their pension contributions.

princeofpounds

Even as a non-earner, you can pay up to £2880 per annum into a pension and receive tax relief - a simple stakeholder might suit for the time being.

This is a useful tool to keep things ticking over, unless you husband gets better tax relief.


Also the lifetime ISA that has just been announced might be a worthwhile retirement savings vehicle. The money is locked-up, but you get a 'bonus' on the saving that is a similar order of magnitude to tax relief (depending on your band obviously!)


High interest savings accounts would come after all this. They are a nice way to boost cash savings but they are not suitable for decades-long pension investments and get no tax relief.


You might also want to consider your marital situation with your partner, frankly. The optimal thing to do would be to get married, and thereby have his pension provision become part of your marital assets.


Obviously this choice is for the two of you to make, but the marriage and divorce structures really are purposefully designed to balance things out where one partner makes a sacrifice of their earnings potential to raise family for the couple.

lolamancity

Very useful replies, thanks so much.

Marriage is a sticky subject to be honest - I have been married before and now divorced. I've been with my partner for nearly 7 years and can't ever see us separating, but they you can never day never I suppose! I certainly didn't forsee being divorced from my last relationship either! I've always been adamant I don't want to remarry so if I suddenly did a u-turn, and then started heavily working on our finances, I think my partner would be pretty hurt (and suspicious haha)

greenglide

Presumably you get Child Benefit and it is paid in your name?

Receipt of Child Benefit will get you NI credits which is important towards your State Pension but the ChB needs to be in your name.

lolamancity

Yes, child benefit x2. And carers allowance which I believe have some additional pension credit element to it - although, my sons disability level in the eyes of the assessors could change in the future which would then affect whether or not I get carers allowance

bigadaj

lolamancity wrote: »

Very useful replies, thanks so much.

Marriage is a sticky subject to be honest - I have been married before and now divorced. I've been with my partner for nearly 7 years and can't ever see us separating, but they you can never day never I suppose! I certainly didn't forsee being divorced from my last relationship either! I've always been adamant I don't want to remarry so if I suddenly did a u-turn, and then started heavily working on our finances, I think my partner would be pretty hurt (and suspicious haha)

From the financial perspective you would be more secure being married, and with kids involved that's probably more important still.

Most people can't foresee changes in their life but they frequently happen.