Where to start? Its time to think about a pension

M_aggie

What is the min that I could start to pay into a pension?  I think I need to start a pension but no idea where to start and whenever I've spoken to advisors before its been clear my income is too small for them to bother with. What options could I start to look at in very simple terms please :-)   It has all seemed to complicated to consider before - should I be looking at ISA or pension, is NEST simplest option at small amounts? 

I have paid into previous LGPS - assuming retiring at 65 then lump sum of 19k  and annual of £9500 projected.  I understand that affects my state pension which projected is £5564.  Not paid into anything since other than one months (!) auto enrolment on NEST before I left that job. 
Age 45, self employed, mortgage paid off, no debt, annual income approx £12-15k. Savings to cover at least a year.

Gut instinct is that I could roughly cover my current outgoings but that leaves no buffer for changes to pensions etc. 
Also partner same age but next to no pension! yikes :-(  (but some savings) -  which is why I think we need to start thinking about this.

Would really appreciate a simple steer as to where to start!  I have no knowledge of pension products. Many thanks. 

dunstonh

What is the min that I could start to pay into a pension?

£1

It has all seemed to complicated to consider before - should I be looking at ISA or pension, is NEST simplest option at small amounts? 

Nest is really aimed at the small company with a handful of employees that the pension companies are not interested in offering their product too (most insurers have a minimum amount of people and/or contribution level overall - Nest does not).  It does offer an individual plan but its not its primary objective.

There are some good robo option available.  The likes of pensionbee cater for the small contributions and are simple to use.

M_aggie

Thank you @dunstonh
Just been to look at PensionBee - am I right in thinking that if I put in 100 a month for 20 years  I would potentially break even in effect at age 78  Is that looking at it too simplistically?   

dunstonh

M_aggie said:

Thank you @dunstonh
Just been to look at PensionBee - am I right in thinking that if I put in 100 a month for 20 years  I would potentially break even in effect at age 78  Is that looking at it too simplistically?   

Pensions dont really work like that any more.   There is no breakeven point unless you buy an annuity.  And the vast majority do not do this any more.   
If you put in £24,000 over the years and it grew to £50,000 then you have £50,000.  you could draw it all on one day or you can take it over any period you like.   If you drew £1500 a year and had £60,000 left in the pension when you died, then the pension fund is passed to your beneficiary.   If you drew £2500 a year and had £30,000 left in the pension, then exactly the same.   Its all based on how quickly you spend the pot.  Spend it too fast and you run out.  Spend it too slowly and your beneficiaries inherit more.

Albermarle

A pension is simply a way of making long term investments that have  some tax advantages over non pension investments .
https://www.moneysavingexpert.com/savings/discount-pensions/
https://moneyfacts.co.uk/retirement/guides/beginners-guide-to-pensions/
You pick a pension provider , start the pension on line , add some money and then pick the investment you want . Some only have a few simple and clear investment choices which makes it easy for beginners. 'Pension Bee' is mentioned above but I think they mainly focus on finding and transferring old pension into them . You can also have a look at https://www.nutmeg.com/pensions
https://www.legalandgeneral.com/investments/pensions/
This one has more choice of funds 
https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

[Deleted User]

Read a John Edwards book. 

M_aggie

Thanks all, that has given me some starting points thank you, much appreciated.

Albermarle

When looking at how much a pension pot might grow to in future , there is a big difference between its actual size and how much it is worth in todays money . So you have to take projected levels of inflation into account . For example 
If you had £10K in an investment/pension today and added no more to it . Then lets say it grew at 6% pa for 10 years you would have about £16.5K . However if inflation was 3% on average over the ten years its real value would only be around £13K ( in todays money) 
Luckily most pension projections take this into account and quote future pension income in todays money using a guess at future inflation. Also these projections generally tend to be a bit pessimistic/over cautious.

AlanP_2

State Pension projection sounds low? Is that what it is now or what it will be when you are 66/67?

Are you earning SP credit each year though NI payments?

How / Why does your deferred LGPS pension affect your State Pension? It was a Contracted Out scheme so no SERPS built up but that hasn't been relevant for a few years now.

What is your partrner's State Pension situation?