Student Pension?

newsreader21

Hello everyone,

I am completely new and completely naive when it comes to pensions. I am 21 and a student - currently doing a placement year before finishing my last year at uni.

Now that I am earning a bit of money on placement, I thought about starting a pension early. Is this a good idea? Would it be more worthwhile and safer to invest a bit of spare cash in other schemes? I have a savings account and a large ISA - if that matters?

I heard I might be able to get a good pension, starting young, is this the case? Also is their an equivilent of a student discount, i.e. getting a 10% better rate?

I probably sound really stupid, so apologise!

I have had a brief look on the net, but sites like the http://www.thepensionsregulator.gov.uk/ just confuse me! Any simple, easy to understand advice would be great!

Many Thanks!
Charlie

dunstonh

Is this a good idea?

Any saving you do is a good idea.

Would it be more worthwhile and safer to invest a bit of spare cash in other schemes? I have a savings account and a large ISA - if that matters?

You are still a student and you have a lot of unknowns to follow. i.e. where are you going to work, when are you going to work, how much are you going to earn, will they have an occupational pension or rely on the NPSS etc

With that in mind, going into the pension tax wrapper doesnt make a lot of sense right now. Using the stocks and shares ISA wrapper gives you far more flexibility and choice.

I heard I might be able to get a good pension, starting young, is this the case?

The earlier the better as it has longer to be invested. That means you dont have to pay over a shorter period and pay more monthly for putting it off.

Also is their an equivilent of a student discount, i.e. getting a 10% better rate?

No. However, you get tax relief whether you are a tax payer or not.

I have had a brief look on the net, but sites like the http://www.thepensionsregulator.gov.uk/ just confuse me! Any simple, easy to understand advice would be great!

pensionsregulator doesnt apply to you as you dont have an occupational pension. If you did go down the route of personal contributions, it would be via the use of a stakeholder pension, personal pension or SIPP. These are regulated by the FSA. The FSA will not give advice as that is not it's role. It will give information in generic form but nothing else.

Personally, I think you should use the S&S ISA (or Cash ISA if you may need that money in the next 5 years).

newsreader21

Thank you very much, that is very insightful and I agree that I do not want my money tied up completely just in case I desperatley need it! I will check out an S&S ISA and Cash ISA, does that mean I have to cancel my existing ISA? Or am I allowed more than one?

dunstonh

It depends on what your current ISA is. If it is a MAXI, then you can only contribute to one MAXI per tax year. If it is a MINI cash isa then you can contribute to a MINI stocks and shares ISA in the same tax year with any provider you wish. If you havent contributed to any ISA in this tax year, then you have all options available. ISAs are based not on what you hold but what you pay in and when.

newsreader21

Ok thanks, I believe I have a MAXI, and was set up this year, but will keep some money in a regular savings account untill next finacial year and then check out the ISA's available.

Yea I hope to leave uni with a degree and small amount of debt, hehe, we will see....

Thanks again both of you

chesky369

I don't know what's wrong with the youth of today!
A student worrying about pensions? What's wrong with sex 'n drugs 'rock&roll?