Starting a private pension - when is 'too late'..?

Charlton_King

This may be a crazy question but does reaching pensionable age actually debar one from starting paying into a private pension plan?

Looking around at returns available on deposits, it seems to me that the government tax break on pension contributions makes it quite an attractive option to do this... providing it's allowed of course!

JoeCrystal

No it doesn't, it is never too late.

zagfles

Pension age isn't too late, but age 75 is generally as you don't get tax relief on pension conts over the age of 75.

Charlton_King

So am I right in thinking that starting a pension and building up a 'pot' during my sixties and seventies would be like getting an 'interest rate' far superior to any deposit-type situation currently available..?

Am I missing something?

AnotherJoe

Are you earning currently ?

chucknorris

Charlton_King wrote: »

So am I right in thinking that starting a pension and building up a 'pot' during my sixties and seventies would be like getting an 'interest rate' far superior to any deposit-type situation currently available..?

Am I missing something?

You might not want to be exposed to equities in your 70's, personally at the moment I am thinking that I will start to wind down my equities when I reach 70, but that is 11 years away, I might stay in longer, I'm not that sure right now. What you (probably) don't want to do is be at risk to a large market correction much later in life, when you might not have enough time left for the market to recover. There will be other options to equities of course.

I would be interested to hear other views on this.

Charlton_King

AnotherJoe wrote: »

Are you earning currently ?

Nope. Have actually just turned 65 and collecting SRP. The 75 cut off for contributions would allow me another ten years of accumulation.

chucknorris

Charlton_King wrote: »

Nope. Have actually just turned 65 and collecting SRP.

How are you finding retirement? Is it totally as expected? If you could turn the clock back, would you have done anything differently in preparation for retirement, I am thinking more lifestyle than financial.

Charlton_King

chucknorris wrote: »

How are you finding retirement? Is it totally as expected? If you could turn the clock back, would you have done anything differently in preparation for retirement, I am thinking more lifestyle than financial.

I guess everyone's path is different. My wife and I invested heavily in acquiring properties for rent throughout the last 25 years and we now have a small stable of (mainly) flats which provide our main income in retirement along with pensions. We had to sell a couple in order to pay off our mortgage and eliminate our kids' student loans.

20/20 hindsight is a great thing but property - in this overcrowded island - never looked to us anything other than a winner.

All in all we're happy with the situation. My wife still has a few years to go, thanks to Mr Osborne, until she too can start collecting her SRP.

dunstonh

So am I right in thinking that starting a pension and building up a 'pot' during my sixties and seventies would be like getting an 'interest rate' far superior to any deposit-type situation currently available..?

A pension is a tax wrapper. A container for investments. You can hold those investments inside an ISA, pension, investment bond (onshore or offshore) or unwrapped. The returns will be the same irrespective of how you hold them. The only differences are the maturity/withdrawal process and tax.

So, the first point is really whether you want to invest or not. Investments means taking on some risk (although being heavy in cash has risks too - just different risks). Risk is not on/off. it is a sliding scale. Once you accept you are going to take on risk, you then look at the investments you want to use and which tax wrappers are best to achieve what you want.

Charlton_King

dunstonh wrote: »

A pension is a tax wrapper. A container for investments. You can hold those investments inside an ISA, pension, investment bond (onshore or offshore) or unwrapped. The returns will be the same irrespective of how you hold them. The only differences are the maturity/withdrawal process and tax.

So, the first point is really whether you want to invest or not. Investments means taking on some risk (although being heavy in cash has risks too - just different risks). Risk is not on/off. it is a sliding scale. Once you accept you are going to take on risk, you then look at the investments you want to use and which tax wrappers are best to achieve what you want.

Surely there is a significant difference between contributions to a pension and those to, say, an investments ISA... or does HMG come along and turbocharge one's ISA contributions in the same way, then..?