Pension Panic - Very late starter - Help!

djpj81

Hi all,

I've never really contributed to any pension schemes in the past and am starting to panic that I am totally unprepared for the future. I have two kids, mortgage and am the only income in my household, so have been opting out for years in a bid to try and keep us out of the overdraft at the end of each month. Is there anything I can do at 39 to fix this in time? There's not much expenditure I can cut now and feel like making any pension contributions would put us at risk of taking on too much debt. I guess it's too late to start creating a worthwhile pot as I have missed so many years of interest? I'm just not sure where to start and how to remedy this? Colleagues tell me I'm passing up free money, but it's useless to me, free or otherwise, if it's tied up in a mysterious fund somewhere...  Help, where should I start?

Thank you

LHW99

Its never too late. Your colleagues are right, you are giving up free money, because your employer has to pay in to a pension when you do, and depending on how the company scheme works, you may get tax and NI savings.

Why not have a look at some of the other boards, like the Debt free wannabee and Savings boards to see if you can find some simple things that would free up some cash to put in the pension

MallyGirl

It is not too late and you need ask yourself if you can live on the State Pension if you have not managed to build up anything in addition. The current state pension is only £8750 a year. Is that enough to live on? If not then you have to start contributing in order to make your retired life better.
Does your partner not work because the kids are pre-school?

Albermarle

Colleagues tell me I'm passing up free money, but it's useless to me, free or otherwise, if it's tied up in a mysterious fund somewhere.

If you opt in to your company pension scheme , then 5% will be taken from your salary each month , although due to tax relief with pensions, it effectively only costs you 4 % . Your employer has to add a minimum 3% but some add more ( do you know how much your employer would add ?) So by paying 4% of your salary you end up with a minimum of 8% going into your pension each month .

The money is not accessible until you are at least 55 but after that it will be easily accessible ( don't worry about mysterious funds !)

djpj81

MallyGirl said:

Does your partner not work because the kids are pre-school?

Hi there, that's right. She wants to find a new job once both kids are in Primary, so there should be some relief coming in a couple of years time. She has always worked in the past up to the point of having the kids, so has been making NI contributions previously. 

xylophone

When you contribute to a pension your employer also contributes.
Which scheme is being offered by your employer?
Do you have any protection in place to cover your family in the event of your premature death?
Is it impossible for your partner to work outside the home?

djpj81

xylophone said:

When you contribute to a pension your employer also contributes.
Which scheme is being offered by your employer?
It's a Salary Sacrifice one - But I'm very reluctant to reduce my take home pay.

Do you have any protection in place to cover your family in the event of your premature death?
Nope - I got some life insurance quotes recently, but can't afford the extra outgoing per month, even more so if I were to start attempting some kind of pension contribution.

Is it impossible for your partner to work outside the home?
We haven't looked into any home working. She looks after the kids full time in the day as the youngest doesn't go to nursery yet, so she wouldn't be able to do anything during the day.

Thank you

swindiff

Even more reason to opt in if it's salary sacrifice.

JoeCrystal

Especially if the employer shares the NI savings on top as well, how much does the employer contribute btw?

Lokolo

I think you should start with a budget planner / SOA. You keep saying "you can't afford to", but you've decided to have two children, and now struggle each month to stay out of your overdraft. Harsh yes, but you need some sort of reality check. 
Am I right in saying that your wife claims child benefit? If she does, at least then she will be getting NI contributions towards state pension.

Do you currently track your spending? If so, what is your take home, and what are your regular expenses. 

xylophone

Salary sacrifice is worthwhile, particularly if NI savings are shared.
Can you say whether your workplace scheme is Defined Benefit or Defined Contribution?

We haven't looked into any home working. She looks after the kids full time

And you don't think that's work?

Nope - I got some life insurance quotes recently, but can't afford the extra outgoing per month, even more so if I were to start attempting some kind of pension contribution.

What would happen about paying the mortgage and bills if you were to die prematurely?

Time to post a Statement of Affairs for suggestions?