Should I (can I?) start paying into a pension if I'm on benefits?

Penguin90

I am 27, I have been ill for the last 12 years and cannot work (I receive ESA and PIP) – I hope that that might change in the future, we'll see – but for now I don't know what, if anything, I should be doing about getting a pension.

I've essentially lost a decade of pension contributions, and it could easily be another decade before I'm well enough to work... what do I do?

nrsql

I would be concerned about locking savings away for the next 28 years.
You don't know how things might change and you are at the mercy of any future benefit changes if you are unable to earn.

Saying that, look at how savings affect your benefits and how to protect against it.
But well done for living below your benefit income.

Marcon

If you are chronically ill and living on benefits, life can't be that much fun. Investing into something you may not be able to access for another 30 or so years (although earlier access is sometimes possible in cases of ill health), and which might have an adverse impact on your benefits, may not be the best idea.

Do hope your health improves soon.

michaels

I may be wrong but I think if you were able to work a few hours a week and paid all your earnings into a pension then none of that included me would be counted when your benefit entitlement was calculated.

Penguin90

Hmm, so I should do nothing? I can't help but worry about the future.

madvicker

I'd have to agree with poster no. 1 and 2. If you have been ill for the last 12 years and you don't see your situation changing drastically in the future, then locking away money until the age of 55 doesn't seem like the best plan. If you do have spare money each month, then it would be much better to put this into a stocks and shares ISA. This will give you the growth your savings will need to fund you later in life, but also give you access to your funds if you need them. Bear in mind it can take up to a month to release money from stocks/funds/bonds etc.

Happy to give you more specific advice if you wish. A breakdown of your outgoings and income would help.

Penguin90

madvicker wrote: »

I'd have to agree with poster no. 1 and 2. If you have been ill for the last 12 years and you don't see your situation changing drastically in the future, then locking away money until the age of 55 doesn't seem like the best plan. If you do have spare money each month, then it would be much better to put this into a stocks and shares ISA. This will give you the growth your savings will need to fund you later in life, but also give you access to your funds if you need them. Bear in mind it can take up to a month to release money from stocks/funds/bonds etc.

Happy to give you more specific advice if you wish. A breakdown of your outgoings and income would help.

I guess that makes sense. My main concern is what happens when I'm well enough to work - is it possible to build up a decent pension on an average salary (I'd like to train to be a teacher in the future) if I start in my mid 30s?

madvicker

The important thing to remember with a pension is it is just a savings product. Albeit a very tax efficient one. Whilst your current situation doesn't seem to be ideal for saving into a pension, you can still create a healthy pension in your mid 30's if your situation improves. Until then, your best bet is stocks and shares ISAs for the tax efficiency and long term growth.

justme111

you will have sime minimal income in retirement anyway - pension credit I think. which may be similar to your present income. bid worrying about pension is likely to be misplaced . it pales into insignificance compared to health and work present situation.

jamesd

Penguin90 wrote: »

is it possible to build up a decent pension on an average salary (I'd like to train to be a teacher in the future) if I start in my mid 30s?

Yes. Depending on income, spending and commitment it's possible to get to a "can retire" level in as little as 8-12 years. Key to that is investing a lot of your income, it was over 60% for me. You'll have the same big advantage as I did, being used to a low spending life.

atush

Penguin90 wrote: »

Hmm, so I should do nothing? I can't help but worry about the future.

No one said to do nothing. If you have more income than you need, save it. Into cash or s+s isas. But only up to the savings limits of your benefits.

Saving after that point into a pension is a good idea