41 years old, self employed with no pension - advice please

leni

Firstly Hi, I haven't been on these boards for absolutely years!

Anyway, I don't have a pension, never have!  I've been self employed for 14 years and well, it's overdue!
Basics... Husband has a very good work pension.  We have 2 x annual salary in savings/bonds.  £80k left on the mortgage.
My choice is either overpay the mortgage every month or start a pension - I'll have approx £200 a month to invest (20% of my monthly salary)

I'm a total pension novice and the H just leaves his to work to sort out.  So given the info above, am I better with a stakeholder pension or a SIPP?

Any preferred companies to go with?

Thanks in advance

Pat38493

Are you an employee?  If so your best bet might well be to join the employer pension scheme because they will probably match at least some level of contributions.  Seems like you are a part time worker based on figures quoted?

Dazed_and_C0nfused

 Pat38493 said:

Are you an employee?  If so your best bet might well be to join the employer pension scheme because they will probably match at least some level of contributions.  Seems like you are a part time worker based on figures quoted?

Op said this,

Anyway, I don't have a pension, never have! I've been self employed for 14 years and well, it's overdue!

Pat38493

Dazed_and_C0nfused said:

 Pat38493 said:

Are you an employee?  If so your best bet might well be to join the employer pension scheme because they will probably match at least some level of contributions.  Seems like you are a part time worker based on figures quoted?

Op said this,

Anyway, I don't have a pension, never have! I've been self employed for 14 years and well, it's overdue!

Oh yes sorry I had missed that part.

Linton

One thing to consider - what would your financial position in retirement be should your husband die before you?  Are the terms of his pension sufficient to provide a reasonable standard of living for you on your own?

If it is necessary to rebalance your pensions could your husband help pay for additional pension for you? You can contribute up to your total earned income into your pension.  £12K/year would lead to a reasonable sum in a few years.  Plus you would get tax relief even if you are not paying any tax. ie to contribute £12K/year you would only actually pay in 80% =£9600.  HMRC would add the missing £2400.

On-the-coast

First things first… 
you do have.a state pension don’t you?  

Class 2 NIC a the best investment around - so check that you’re up to date with your payments and back-pay them if necessary. 

Then… are you doing pension planning as a couple?  Consider the various rates of tax between you and your husband (and the consequent tax savings) before you make a decision. Also check how much of your husband’s pension you inherit upon death. 

Good luck - you’re not in a bad position (as a couple) but I’d understand if yiu want to build up your own pot. 

MX5huggy

Stakeholder pensions are an old product forget them. 

Get a SIPP you put the £200 in the pension company will get £50 from the government as the tax relief added to it.

Look at Vanguard it’s quick a massive company and cheap. Choose a fund to invest in in someways it doesn’t matter what at this stage it’s the £200 a month that’s going in that counts. But I would say go for the Developed World ETF with the code VEVE. It invests in 2000 plus of the biggest companies in the whole world. So will say it’s too high risk but your only looking at £200 a month so £3000 at the end of year one compared with your cash savings is nothing. When you get to £10k you might consider the risk again. 

Someone will Vanguards SIPP is not a true SIPP, don’t worry it’s splitting hairs about Vanguard only offering their own funds and not whole of market. 

Pat38493

I’ll try again then.  

I think I have read on here that if you pay the money into a pension like a SIPP, you will get 20% tax relief from HMRC added to it (even though it looks like you are under the personal allowance so the tax paid on your earnings may be nothing).

So you are looking at a 20% instant return, plus whatever return you get on the invested money which might well exceed your mortgage interest rate in the long term.  The SIPP money would be partly taxable on the way out but with the amounts you are talking about, it would take a long time to accrue enough to exceed the personal allowance when your draw it out.

Therefore I would veer towards the pension based on what you said.

Dazed_and_C0nfused

Pat38493 said:

I’ll try again then.  

I think I have read on here that if you pay the money into a pension like a SIPP, you will get 20% tax relief from HMRC added to it (even though it looks like you are under the personal allowance so the tax paid on your earnings may be nothing).

So you are looking at a 20% instant return, plus whatever return you get on the invested money which might well exceed your mortgage interest rate in the long term.  The SIPP money would be partly taxable on the way out but with the amounts you are talking about, it would take a long time to accrue enough to exceed the personal allowance when your draw it out.

Therefore I would veer towards the pension based on what you said.

Its actually a 25% instant return.

Op pays £200.  Pension company adds £50 (courtesy of HMRC).  Which is 20% of the gross contribution.

leni

On-the-coast said:

First things first… 
you do have a state pension don’t you?  

Class 2 NIC a the best investment around - so check that you’re up to date with your payments and back-pay them if necessary. 

Then… are you doing pension planning as a couple?  Consider the various rates of tax between you and your husband (and the consequent tax savings) before you make a decision. Also check how much of your husband’s pension you inherit upon death. 

Good luck - you’re not in a bad position (as a couple) but I’d understand if yiu want to build up your own pot. 

Yes NI all up to date, I have 25 qualifying years so on target for the additional 10 years for a full state pension.

Re as a couple, I just tell him what our state of affairs are and he just agrees - I'm the financial one ha ha  I'll check out his pension though in regards to inheritance.  My plan was to over[ay the mortgage but he's asked whether a pension is a better investment.  I'm planning on splitting my pot so I overpay mortgage AND start a pension.

Dazed_and_C0nfused

leni said:

On-the-coast said:

First things first… 
you do have a state pension don’t you?  

Class 2 NIC a the best investment around - so check that you’re up to date with your payments and back-pay them if necessary. 

Then… are you doing pension planning as a couple?  Consider the various rates of tax between you and your husband (and the consequent tax savings) before you make a decision. Also check how much of your husband’s pension you inherit upon death. 

Good luck - you’re not in a bad position (as a couple) but I’d understand if yiu want to build up your own pot. 

Yes NI all up to date, I have 25 qualifying years so on target for the additional 10 years for a full state pension.

Re as a couple, I just tell him what our state of affairs are and he just agrees - I'm the financial one ha ha  I'll check out his pension though in regards to inheritance.  My plan was to over[ay the mortgage but he's asked whether a pension is a better investment.  I'm planning on splitting my pot so I overpay mortgage AND start a pension.

Those rules don't apply to you.

35 years is only for people starting to accrue NI years from 2016.

It may be that you do need 35 years but as you are under transitional rules you really should check your State Pension forecast on gov.uk so you know exactly where you stand.

As you are self employed chances are it will show what you have accrued to 5 April 2022 at the moment (you have to ignore the headline figure) and that will enable you to check exactly how many more years you need to reach £203.85/week.