Pension for unemployed?

mrsharnott

Hi, I am a stay at home mum and have been trying to research what my best option is in terms of a pension while I’m unemployed but it’s not really covered in what I can find on the page.

I was employed until last April and have pension contributions from that which are now frozen. I also have full years NI contributions towards state pension as child benefits is in my name.

But I’m wondering about paying into a pension myself (and transferring the frozen contributions from previous employment) from husband’s earnings & tax credits. How do I find out about this? Or is this not a good option for me?

Thanks

molerat

As you have no earned income you can only contribute £3600 to a pension. This would be £2880 of your money to which the taxman would then add £720. There are a few threads on this board about the subject.


Why do you want to transfer your previous employer pension ? It is unlikely that it is "frozen" but will either be increasing with inflation or following the markets depending on the type.

MK62

If you can afford it, then it's usually a good option.


Non-taxpayers can save up to £3600pa into a pension, and part of that is tax relief....so you pay in £2880, and HMRC adds the other £720.

MallyGirl

you can pay £3600 per year into a pension - costs you £2880 and 20% tax relief makes up the rest. You get the tax relief even though you haven't paid any so that is £720 free money from the gov.
Whether it is worth consolidating other pensions should be looked at separately.

Camster

If you are staying at home to look after children, you will also be eligible for Home Responsibility Protection, which credits you with National Insurance contributions towards your state pension if you are not working and looking after a child under 12 years old.

mrsharnott

I suppose I wanted to transfer it so it’s all in one place, as I currently have 3 separate amounts from 3 separate jobs so this would be a 4th pot, then it all gets very confusing. I just don’t really understand it at all... so how do I find out who is best to do it through? Or would it be easier to just up my husband’s contribution?

lisyloo

Sometimes pensions should not be moved if either

They have a large penalty
They have a benefit
They have low charges

It’s also possible the charges are high and it should be moved.

This can be difficult to work out for yourself (I failed even with help from these forums).
Do you or your husband have an IFA that you use currently?
If you have an existing relationship then they might look at it for you.

MallyGirl

mrsharnott wrote: »

I suppose I wanted to transfer it so it’s all in one place, as I currently have 3 separate amounts from 3 separate jobs so this would be a 4th pot, then it all gets very confusing. I just don’t really understand it at all... so how do I find out who is best to do it through? Or would it be easier to just up my husband’s contribution?

it might be easier to increase his contribution but it is unlikely to be the best plan.
When you come to take money out of pensions in retirement you each get a personal allowance (£12,500 today) and you pay no tax on that bit, with 20% or even 40% tax on the amounts above. If you have very little in your pension and he has the lion's share then you may not be able to use all your personal allowance so, as a couple, more tax will be paid as it will be coming from his larger pot and a highre proportion of it will incur income tax.

mrsharnott

This is now NI credits and I have that in full but state pension isn’t very high so I’m looking to have an extra pot put away

mrsharnott

Sorry I don’t know how to use this forum. It won’t let me quote or edit my posts lol. I don’t have an IFA and I wouldn’t be able to afford one.

atush

Call each pension, and ask about the charges (and any guarantees).

If they are DB, i'd leave them alone (to grow each year) if they are DC then if one is low charging, and has been converted to a personal pension (as many do) then you could use that one to put your ongoing contributions in. You dont necessarily have to open a new pension.