Starting pension contributions at 43.

letspretendforaminute

I'm looking to start pension contributions of £240p/month (net) from April (next financial year) and continue until aged 60 (17 years). It'll be a mix of Vanguard FTSE 100 tracker and my own stock picks. I transferred £8k from old pensions into this pot 8 years ago and it's increased in value to £28k. Trying to keep the yield at 4%+ the online savings calculator suggests this could be £140k 
I'll also refinance my debt £24.5k over 7 years at £350p/month (5.9%) and hope to be debt free at 50. 
I own 25% (£50k) equity in a shared ownership home, no mortgage and rent the remainder for ~£375p/month with no plans to staircase.
I'm a single parent with £2,250p/month income including universal credits (UC £1,100, Child Maintenance £650, CB £137 and £375 salary).
Question: Do I inform anyone of my pension contributions? Is it sensible to pay into a pension at the same time as refinancing debt or just focus on paying the off the debt that includes the financing of a new car (£10k and good for 7 years).
Am I doing enough?

Dazed_and_C0nfused

You could go the whole hog and put in £300 net.

They may well impact UC, might be better posting on the Benefits board about that aspect.

kinger101

Personally, I'd not be spending £10K on a car if I needed a loan to finance it.  Historically, I've spent less than half that an 8+ year old Mondeo, with 80-100K on the clock.  They're tended to last around 5-7 years before repairs have become uneconomical.

Many would argue that paying off debt should take priority of pension, but I think you definitely need something going into the pension - particularly if it's affordable.  Could you confirm whether you have access to an employer's scheme, and if so, whether this is salary sacrifice or not?

I'd also stick to one low cost globally diversified tracker such as Fidelity World Index or one of the Vanguard VLS funds.  At £300 a month (gross), you're going to have very high transaction costs on individual stocks.

letspretendforaminute

kinger101 said:

Personally, I'd not be spending £10K on a car if I needed to a loan to finance it.  Historically, I've spent less than half that an 8+ year old Mondeo, with 80-100K on the clock.  They're tended to last around 5-7 years before repairs have become uneconomical.

Many would argue that paying off debt should take priority of pension, but I think you definitely need something going into the pension - particularly if it's affordable.  Could you confirm whether you have access to an employer's scheme, and if so, whether this is salary sacrifice or not?

I'd also stick to one low cost globally diversified tracker such as Fidelity World Index or one of the Vanguard VLS funds.  At £300 a month (gross), you're going to have very high transaction costs on individual stocks.

I do ~30,000 miles a year and needed something reliable and it was bought last year anyway, I didn't make that clear sorry.
The employers pension scheme isn't terribly good with only matched contributions and on such a low salary. I'll look into those funds thank you and with regular savings the transaction costs on individual stocks can be very low... from £1.50 trading costs.
As of today I have £4.5k in IQE, £4.25k in SSE, £4k in BAE, £4k in VOD, £3.5k in EMG, £2k in KHC (kraft heinz), £2k in JLP, £1.3k in both HMZ and EFR (energy fuels) and £1k in LLOY for me the sweet spot for dividend income is £4k so my first task will be to bring this up to £4k and that'll be my first monthly savings instruction then I'll look to the funds. 

kinger101

Guess you're well below paying NI anyway, so salary sacrifice is not relevant.  But make sure you're getting the maximum employer match at least.  The transaction costs aren't the only problem with individual stocks.  Lack of diversity is too.  At the end of the day, it doesn't really matter if pension income is derived from dividends or capital growth.

letspretendforaminute

kinger101 said:

Guess you're well below paying NI anyway, so salary sacrifice is not relevant.  But make sure you're getting the maximum employer match at least.  The transaction costs aren't the only problem with individual stocks.  Lack of diversity is too.  At the end of the day, it doesn't really matter if pension income is derived from dividends or capital growth.

Not in the employers pension scheme as I'm below the compulsory opt-in threshold for salary. I hold a mixture of *growth stocks and income stocks. 10 so far and there are some equity income funds weighted heavily towards half a dozen or so bluechips.
*£8k to £28k in eight years suggests I've targeted growth quite well.

kinger101

It's good growth, but that 8 years has been in a bull market.  I wound't necessary equate it with an innate ability to pick winners.  

letspretendforaminute

kinger101 said:

It's good growth, but that 8 years has been in a bull market.  I wound't necessary equate it with an innate ability to pick winners.  

For picking growth stocks, 2 winners out of 3 isn't bad going. That's my rolling average. Have also managed to do the same for the exes portfolio that is well into six figures now. 

michaels

As others have said, any matched employer contributions should be taken advantage of but minimum wage may also come into play.

You are also limited to your gross pension contribution into your sipp not exceeding your gross salary so £375pm max after tax relief.

I have an economics degree but believe in rational markets so would never try to pick individual stocks.

You can deduct all pension contributions from your income that is assessed for UC purposes (I get tax credits and pension contributions reducing income increases tax credits by 41% of the amount paid into the pension) and of course pension holdings are not treated as capital in UC calcs.

letspretendforaminute

michaels said:

As others have said, any matched employer contributions should be taken advantage of but minimum wage may also come into play.

You are also limited to your gross pension contribution into your sipp not exceeding your gross salary so £375pm max after tax relief.

I have an economics degree but believe in rational markets so would never try to pick individual stocks.

You can deduct all pension contributions from your income that is assessed for UC purposes (I get tax credits and pension contributions reducing income increases tax credits by 41% of the amount paid into the pension) and of course pension holdings are not treated as capital in UC calcs.

Thank you... this is interesting. I'm choosing to put £2,880 in as this is the amount anyone can contribute regardless of earnings. My earnings are pretty close to NMW and I'm wary of salary sacrificing below this. Work is really flexible with the number of hours available to me are 10-30 (shame I can't specify shifts as child care is an issue) so would this monthly contribution of £240p/month then allow me to increase the hours I work by ~6 effectively meaning I can earn £500p/month without hitting the 63p taper? Thank you.

Thrugelmir

Why the FTSE 100? As a base I'd suggest a much broader investment fund to start with. I'd use the stock picks to select the 4% plus yielders. Though on what basis are you going to select these. Ideally they need to meet a set range of criteria not just look attactive on what they currently pay out. You need to ask yourself why others are the shunning the stock given the low level of interest rates these days. Dealing costs mount up. Which would greatly reduce your yield/return on smaller sums.