Full time Mum pension advice needed

Bri79

Hello,
I’m a full time mum and have been for 12 years, I’m also registered as carer to one of my children and I foresee this being a full time need for a good few years yet. I’m 42 and only have a very tiny pension from when I was younger which will pay out £600 a year, I know I’m getting my NI contributions and will be on track to receive state pension. My hubby has an employer pension but I’m feeling like I need to get something going myself but I’m not sure what’s the right path. 

Should I start a private pension, save into an ISA or add it to the mortgage to try and clear it earlier? At the moment I envision being able to pay in £100 a month, I hope to work in the future but my Mum has recently been diagnosed with Parkinson’s so I may well be her carer alongside still supporting my then adult disabled child, any advice would be really appreciated, feel like a headless chicken with it all. Thanks.

MallyGirl

One thing you can definitely do as a non earner is to contribute up to £2880 to a pension and have the government add tax relief of £720 to take it up to £3600. This is even though you didn't pay any tax - free money!
A pension, even without the tax relief, should grow faster than the interest rate on your mortgage. It will vary as the stockmarket does but overall it will go up.
You can open a stakeholder pension or a simple SIPP with low fees

MaxiRobriguez

In your position you need to be careful. Money pushed into a pension is money that can't be accessed until 55. 

You need to assess whether your childs financial requirements will grow as they get older - you may end up needing the money you have stashed away.

Not saying don't do it - just need to be sure you meet cash flow needs now whilst still saving for future.

MX5huggy

Your financial future is tied up with your husband’s. You need to look at it as a whole. I know some couples keep their finances separate but I presume he’s not planning a luxury retirement for himself while you manage on SP. If he is a higher rate tax payer, or has the option is Salary Sacrifice pension contributions it’s better for him to make the additional contributions. 

In the event of divorce you have a claim on his pension anyway. 

xylophone

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

might well suit your purpose ?

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/investing-success/financial-goals-one-fund

Alexland

MX5huggy said:

If he is a higher rate tax payer, or has the option is Salary Sacrifice pension contributions it’s better for him to make the additional contributions.

Yes it's worth considering alongside the spouse's pension arrangements but the efficiency of making the contribution needs to balanced against a view of the tax that the working partner might pay on withdrawal for having a good sized pension when compared to the amount that the OP might be able to draw tax free within their personal allowance. It's hard enough to do that maths without then risk assessing how the tax rules might change in future. Overall putting £100 a month into their own pension probably isn't a bad thing but at the very least ensure that the partner is putting enough in to get the maximum employer contributions or benefits.

Bri79

Thanks all for your advice, hubby is paying maximum into his work pension and I don’t think he has any plans to live the high life while I’m on beans so I should be ok. Really we want to make sure we can offer financial support to our children, especially if they can’t work (two are disabled but obviously I only have carers for one). Thank you for making the point about paying tax when withdrawing as I hadn’t considered this, I think I’ll start a small private pension that won’t overstretch us financially and that I can add more to later on and withdraw probably tax free if I’m still a carer, thanks again.

thickasabrick

Bri79 said:

Hello,
I’m a full time mum and have been for 12 years, I’m also registered as carer to one of my children and I foresee this being a full time need for a good few years yet. I’m 42 and only have a very tiny pension from when I was younger which will pay out £600 a year, I know I’m getting my NI contributions and will be on track to receive state pension. My hubby has an employer pension but I’m feeling like I need to get something going myself but I’m not sure what’s the right path. 

Should I start a private pension, save into an ISA or add it to the mortgage to try and clear it earlier? At the moment I envision being able to pay in £100 a month, I hope to work in the future but my Mum has recently been diagnosed with Parkinson’s so I may well be her carer alongside still supporting my then adult disabled child, any advice would be really appreciated, feel like a headless chicken with it all. Thanks.

Apply own oxygen mask before helping others.

In your case the need to ensure that you have your own "oxygen mask" in retirement probably makes a personal pension a more appropriate choice. 

Put your figures into a  pension tax relief calculator and £1200 will be topped up by £300 to give you £1500.

Investing £125 a month (£100 contribution £25 tax relief) over 25 years. Using a compound growth calculator with 5.25% interest rate.
Vanguard FTSE All World UCITS ETF 3 year annualised performance is about 9.5%. Historical for developed market inflation adjusted is about 5.25%. 

With tax relief calculates to £ 74,108.27.
Without tax relief calculates out at £ 59,286.61.

If you are undecided, start a stocks and shares ISA with a low cost global tracker. Then before the tax year ends, you can decide if you want to switch it into a SIPP to get the tax relief.

The important thing is to start now.

Albermarle

Do not forget that once your disabled children are 18 the state will treat them as adults, and  depending on their level of need they will most likely receive some level of benefit payments directly , even if they still live at home and you maybe have to handle the bank accounts etc. This will be completely separate from you and your husbands  finances but can help the family finances overall .

bagpussofsussex

Hi,

I’m in a very similar situation - I have a small old occupational pension and a very tiny nest pension, which I want to switch to Vanguard, then continue with monthly contributions. I have no idea how to choose a fund - there seems to be a bewildering array of options when you go through the signing up process. I’ve read that the ones targeted to a specific year are possibly not the best option but I have no clue. My husband has a very good pension so I don’t need to be risk averse, I just would like something more in my own name and take advantage of the tax benefit. 

xylophone

which I want to switch to Vanguard,

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account

You could choose the Target option if you want something ready made.