Parents with no pension, I’m a higher earner

Goodproblems

No I don’t think so. I’ll ask them to do this.

Brenster

Are you an only child ? The reason i ask is maybe you could purchase their house as a pension investment, for maybe a negotiated lower price you could purchase and let them live rent free (securing your future and giving them more financial freedom in there retirement).  Obviously possible with siblings but prob would get more complicated.  Be careful with this however and ensure even though it is a family / trust arrangement you get some sort of agreement drawn up, although these things are entered in to with the best will in the world i am sure they commonly end in disagreements / resntment.

xylophone

a very small private pension 

This must be the pension of one of your parents - the value is only around £30,000?

How does the parent intend to take this pension?

NedS

Goodproblems said:

I think paying into a pension sounds like a good initial option although it’s annoying they can only get the 20% tax relief and not benefit from the full 45% I would get if investing in my own pension - both serve the same purpose really!

No, not really. Each serves a very different purpose. One you are paying into your own pension for your own future and that will attract 45% tax relief if you are a HRT payer, the other you are gifting money to your parents out of your taxable income. If they choose to stuff £2880 each into a pension and benefit from the 25% uplift through tax relief from the government, that is their concern.

LHW99

xylophone said:

Have both parents obtained State Pension Forecasts?
https://www.gov.uk/check-state-pension

If one / both of them has less than a full pension, it could be worth buying some extra years. However not all years would be of value, it would depend on when they reached SPA and which years are missing.

Goodproblems

No not an only child. I wouldn’t consider buying the whole house as it’s far more money than I would want to tie up/potentially not affordable for me anyway but buying a share could be a possibility.

Yes one parent has the private pension of around the amount you mention, I’m checking how they plan to take it.

I didn’t know that if you buy extra years of state pension, not all years are of equal value. It’s something I’ve been thinking about doing and clearly requires more investigation.

Anonymous101

Have you looked at equity release schemes?
Like many people my initial reaction to these is to be hesitant however I know that the Meaningful Money podcast covered them recently and said they were vastly improved over recent years. Perhaps its worth a sceptical look into especially as you're not relying on any inheritance by the sounds of it.

Goodproblems

That’s interesting, I’d always heard that they were to be avoided at any cost! I’ll take another look, thanks.

Dazed_and_C0nfused

Goodproblems said:

No not an only child. I wouldn’t consider buying the whole house as it’s far more money than I would want to tie up/potentially not affordable for me anyway but buying a share could be a possibility.

Yes one parent has the private pension of around the amount you mention, I’m checking how they plan to take it.

I didn’t know that if you buy extra years of state pension, not all years are of equal value. It’s something I’ve been thinking about doing and clearly requires more investigation.

Some can add £0, others can add £5/week.

Great investment, c£780 could add £5/week (inflation proofed) for 30+ years.

But you need to get them to look at their forecast first, important they read the whole thing not just the headline.

Thrugelmir

Is the mortgage on an interest only basis? When does the mortgage term end?