No pension plans at 58 years old

c129876

Hi 

My Dad is self employed, aged 58, with no private pension or plans.  Just looking for some productive advice about what/ if anything, he could do now.  

Asking as a concerned daughter for my Dad's retirement/pension, or lack of.  I don't need people to highlight that he's not in a "promising" position, I (and he) very much understand(s) and worry about that already. But if he can start putting a little bit aside now, where would be best to do that? Presumably, just a highest paying interest account would be the only option at this point?

Thanks in advance

Flugelhorn

I don't know the proper answer but still worth putting money into a private pension plan as you get the tax relief added on to the sum 

also - have you checked his state pension projection ?

Dazed_and_C0nfused

c129876 said:

Hi 

My Dad is self employed, aged 58, with no private pension or plans.  Just looking for some productive advice about what/ if anything, he could do now.  

Asking as a concerned daughter for my Dad's retirement/pension, or lack of.  I don't need people to highlight that he's not in a "promising" position, I (and he) very much understand(s) and worry about that already. But if he can start putting a little bit aside now, where would be best to do that? Presumably, just a highest paying interest account would be the only option at this point?

Thanks in advance

I'd say number one priority is to check his State Pension forecast on gov.uk as some self employed people are known not to have bothered paying Class 2 NI, which is what builds up qualifying years for the State Pension.

It's important to read the whole forecast in detail, do not assume the headline figure is what he will be entitled to.

If he is a basic rate taxpayer then contributing to a personal pension won't save him any tax but will benefit from the 25% that the pension company will add to his contribution.  

So he pays £2,000 and he gets £2,500 in his pension fund.

RAS

Yep, it will be a slog but getting his state pension maximised out is the priority. After getting the basic forecast, you'll be hanging on for hours to check the details. He may be about to pay a few hundreds or thousands to get an additional £200 per month for life.

As he'll get £1k in his pension scheme for every £800 he pays in, no savings account will beat the return. But he needs to get some decent advice (try Age UK) on the way in which small pensions might affect his future benefit entitlements, even if no-one currently knows exactly what they will be in a decade. No point getting an extra fiver in pension and taking himself over the limit for various discounts and benefits worth £50 a month. 

Does he own, rent privately or in social housing?

dunstonh

 Presumably, just a highest paying interest account would be the only option at this point?

No. Pension beats savings easily.

However, whilst he hasn't got a pension, what has he actually got. Sometimes people mistakenly miss off the tax wrappers and keep their money in a savings account.  Has he got anything?

Luckily, he is a winner under the new single state pension.  

He is also self employed, so he can continue working into his 70s.

If he has a house, he can consider using equity release.

LHW99

And having got the top-ups from HMRC on whatever the puts in, he then gets 25% of the pot back tax-free. Effectively ~6.25% so even now, better than most savings accounts.

If he has enough savings, he can put in up to his after tax income (so if he earns £10k pa, he could put in £7.5k pa, and get the tax top-up to make it £10k), and use the savings to cover living expenses for a while.

He also has almost 10 years until his SPA, and hopefully another 20 after that, so well worth while putting at least some of the money into investments in a SIPP / personal pension, rather than leaving it all in cash.

Dazed_and_C0nfused

LHW99 said:

And having got the top-ups from HMRC on whatever the puts in, he then gets 25% of the pot back tax-free. Effectively ~6.25% so even now, better than most savings accounts.

If he has enough savings, he can put in up to his after tax income (so if he earns £10k pa, he could put in £7.5k pa, and get the tax top-up to make it £10k), and use the savings to cover living expenses for a while.

He also has almost 10 years until his SPA, and hopefully another 20 after that, so well worth while putting at least some of the money into investments in a SIPP / personal pension, rather than leaving it all in cash.

If his profits are £10k he'd have to fund £8k, not £7.5k, think you're looking at what can be taken out rather than the starting position of what can be paid in.

Not sure what relevance "after tax income" has to the amount you are entitled to contribute?

eastcorkram

@Dazed_and_C0nfused

Can you not work into your 70s as an employee?

Dazed_and_C0nfused

eastcorkram said:

@Dazed_and_C0nfused

Can you not work into your 70s as an employee?

You definitely can, I've known one or two 80+ year olds still working a PAYE employee 😀

eastcorkram

Dazed_and_C0nfused said:

eastcorkram said:

@Dazed_and_C0nfused

Can you not work into your 70s as an employee?

You definitely can, I've known one or two 80+ year olds still working a PAYE employee 😀

Apologies! 
I realise now it wasn't you that mentioned that!

MX5huggy

What is the self employment? Does he have a business? Could you and him turn it into a proper business? Then he could either run the business with staff become the owner and take profits/wage off others work or potentially sell the business as a going concern?