No pension plans at 58 years old

squirrelpie

You can contribute to a pension at any age, but IIRC you only get the tax breaks on contributions up to the age of 75?

xylophone

You can contribute to a pension at any age, but IIRC you only get the tax breaks on contributions up to the age of 75?

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Contributions after age 75

Section 188(3)(a) Finance Act 2004

Although contributions can be paid after a member has reached the age of 75, they are not relievable pension contributions and cannot qualify for tax relief.

SouthCoastBoy

I think the interesting conundrum if you have no pension in your late 50s is it worth bothering if you can get pension credit on retirement? This happened to my mum and she ended up getting other benefits such as no council tax to pay, if I remember correctly I think she also got a free boiler installed. Therefore there maybe a sweet spot where one is better off having less pension than more. 

Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount.

dunstonh

eastcorkram said:

@Dazed_and_C0nfused

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

You can but self employed people are often more flexible and do jobs that allow them to control their workload or times easier than an employed person.

Bostonerimus1

Find out his state pension situation on the HMRC website. Do whatever is required to get his SP amount as high as possible…assuming that he’s in reasonable health.

Do a budget and see where savings can be made so that you can aggressively fund ISAs and pensions.
 

Set up a pension for a self employed person and put in as much as possible. Invest in inexpensive tracker funds.

Look into ways to increase business or work more hours if possible. Working a few years longer that the normal retirement age will help the situation.

For the next few years saving and investing should be the priority. Stick with well known firms and simple investments like tracker funds from companies like Vanguard, HSBC, Blackrock, iShares etc. nothing niche or flashy.

c129876

Flugelhorn said:

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 ?

I called them and he had 2 years short, which he has now bought those years. So if we have been given the correct information, I believe he is on target for a full state pension. 

Marcon

xylophone said:

You can contribute to a pension at any age, but IIRC you only get the tax breaks on contributions up to the age of 75?

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Contributions after age 75

Section 188(3)(a) Finance Act 2004

Although contributions can be paid after a member has reached the age of 75, they are not relievable pension contributions and cannot qualify for tax relief.

...but if he has his own limited company (or sets one up now), the company can make contributions and get corporation tax relief for employees who are over the age of 75, effectively extending the window in which someone can 'make' tax efficient contributions. 

Arthurian

SouthCoastBoy said:

I think the interesting conundrum if you have no pension in your late 50s is it worth bothering if you can get pension credit on retirement? This happened to my mum and she ended up getting other benefits such as no council tax to pay, if I remember correctly I think she also got a free boiler installed. Therefore there maybe a sweet spot where one is better off having less pension than more. 

Not unsurprisingly I think the new state pension just takes you above the threshold for pension credit if you get the full amount.

I agree.   https://www.gov.uk/pension-credit   The risk is that the government will change the rules before he hits retirement age.

NurseMoneySaver1122

Dazed_and_C0nfused said:

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.

He is indeed a basic rate taxpayer. 

I am a TOTAL novice when it comes to pensions/investing...but given pensions can go up and down and you can get back less than what you put in, is this risk not higher when taking a pension out at such a late stage (over a shorter period)?

NurseMoneySaver1122

RAS said:

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?

I guess the risk is he doesn't work towards a small pension, then the government change the rules on future benefit entitlement, and he has neither!  But Age UK is a good call...I will call them and see what advice they can give.  

He owns outright with my Mother, who is also self employed and has a poor pension outlook!