Private pension help needed

Cambsalex

Hi all,

I am in my late 30's, mostly self employed and concerned I don't have much of a pension at all. I have done a little bit of research but am totally confused about where to get a private pension and what's best to do.I earn around 13k a year employed salary which takes a small amount into a teaching pension - I believe the maximum I can contribute.

I am not a homeowner yet, but have £110k savings which are all in high interest savings accounts. Of this about 26k is a lifetime Isa with Moneybox which I know can be used in retirement as well as to buy a property - I believe they have pensions available too but I have no concept of if they are good.

If anyone could suggest some basic steps I could take to improve my future as I am a little concerned about my pension situation that would be really helpful. Thanks so much  

r6mile

What are your earnings (employed plus self employed)?
Do you know which scheme your teaching pension is in - is it the Teachers' Pension Scheme (TPS)?

Cambsalex

r6mile said:

What are your earnings (employed plus self employed)?
Do you know which scheme your teaching pension is in - is it the Teachers' Pension Scheme (TPS)?

I earn 13k employed (split between 2 employed teaching jobs of 6.5k each) and I earn 27k self employed, so roughly 40k per year. 

The TPS is the correct scheme yes. 

Thanks again for the reply

xylophone

Do you mean that you have a part time teaching job and are a member of TPS?

Your salary is a very small part of your overall income?

Had you considered AVCs?

https://www.teacherspensions.co.uk/members/faqs/working-life/additional-voluntary-contributions.aspx

You have a very wide choice of  personal pensions available to you but if you wanted a simple option  you might consider Vanguard's offering

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

or perhaps Fidelity, using their Pathfinder tool  to select a ready made portfolio?

https://www.fidelity.co.uk/services/sipp/?gclid=EAIaIQobChMIqMmyutrogQMVY4toCR1pWQ0IEAAYASAAEgIPf_D_BwE&ef_id=EAIaIQobChMIqMmyutrogQMVY4toCR1pWQ0IEAAYASAAEgIPf_D_BwE:G:s&s_kwcid=AL!8153!3!591097896204!p!!g!!+fidelity +personal +pension!1817105748!70153537635&utm_source=google&utm_medium=paid_search&utm_campaign=UK_-_Brand_-_Segment_-_SIPPS_-_BMM&gclsrc=aw.ds

Or you might consider L&G's personal pension, or Aviva's.

If unsure, you could take paid advice from an independent financial adviser.

https://adviserbook.co.uk/

You would tick "confirmed independent" and "pensions and retirement" when the menu comes up.

You can get a state pension forecast here

https://www.gov.uk/check-state-pension

Albermarle

Have a read of this .
Pensions: Everything you need to know for retirement - MSE (moneysavingexpert.com)

r6mile

Within TPS, there are also some other options to increase your pension, including:
- Faster accrual, to increase your accrual from 1/57 up to 1/45 of your salary.
- Added pension, which will buy you extra yearly pension

As previously mentioned there are also additional voluntary contributions.

However one issue is that since your employed earnings are very close to the personal allowance, and TPS is a "net pay" scheme, extra pension paid via payroll will not benefit from tax relief because of the way this type of pension scheme works.

So the easiest thing might be to set up a separate SIPP or personal pension, and just make direct regular payments from that, as you will benefit from tax relief right away.

xylophone

However one issue is that since your employed earnings are very close to the personal allowance, and TPS is a "net pay" scheme, extra pension paid via payroll will not benefit from tax relief because of the way this type of pension scheme works.

https://www.gov.uk/government/publications/pensions-relief-relating-to-net-pay-arrangements/relief-relating-to-net-pay-arrangements#:~:text=The government will pay a,direct to their bank account.

Cambsalex

Thank you all so much for this information it gives mexylophone said:

Do you mean that you have a part time teaching job and are a member of TPS?

Your salary is a very small part of your overall income?

Had you considered AVCs?

https://www.teacherspensions.co.uk/members/faqs/working-life/additional-voluntary-contributions.aspx

You have a very wide choice of  personal pensions available to you but if you wanted a simple option  you might consider Vanguard's offering

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

or perhaps Fidelity, using their Pathfinder tool  to select a ready made portfolio?

https://www.fidelity.co.uk/services/sipp/?gclid=EAIaIQobChMIqMmyutrogQMVY4toCR1pWQ0IEAAYASAAEgIPf_D_BwE&ef_id=EAIaIQobChMIqMmyutrogQMVY4toCR1pWQ0IEAAYASAAEgIPf_D_BwE:G:s&s_kwcid=AL!8153!3!591097896204!p!!g!!+fidelity +personal +pension!1817105748!70153537635&utm_source=google&utm_medium=paid_search&utm_campaign=UK_-_Brand_-_Segment_-_SIPPS_-_BMM&gclsrc=aw.ds

Or you might consider L&G's personal pension, or Aviva's.

If unsure, you could take paid advice from an independent financial adviser.

https://adviserbook.co.uk/

You would tick "confirmed independent" and "pensions and retirement" when the menu comes up.

You can get a state pension forecast here

https://www.gov.uk/check-state-pension

Yes that's correct I have 2 small teaching jobs and am paying into the TPS. I believe I may be paying the maximum amount but I shall definitely look into it as it would be handy if I could pay more. 

Thank you all for suggestions sbout private pensions and the links, this gives me something to look into. Thanks so much. 

Dazed_and_C0nfused

r6mile said:

Within TPS, there are also some other options to increase your pension, including:
- Faster accrual, to increase your accrual from 1/57 up to 1/45 of your salary.
- Added pension, which will buy you extra yearly pension

As previously mentioned there are also additional voluntary contributions.

However one issue is that since your employed earnings are very close to the personal allowance, and TPS is a "net pay" scheme, extra pension paid via payroll will not benefit from tax relief because of the way this type of pension scheme works.

So the easiest thing might be to set up a separate SIPP or personal pension, and just make direct regular payments from that, as you will benefit from tax relief right away.

You've misunderstood how net pay contributions work.

As the op has profits from self employment they will still receive tax relief because of the net pay deductions.  The contributions are deducted from their salary and as a result their taxable income is less so their overall tax liability will reflect their reduced taxable income.

For example instead of having taxable PAYE income of £13k and no spare Personal Allowance they might have taxable income (after deduction of the net pay contributions) of say just £11,700.  Meaning spare Personal Allowance was available to use against their self employment profits.

This is the key thing,

I earn 13k employed (split between 2 employed teaching jobs of 6.5k each) and I earn 27k self employed, so roughly 40k per year. 

Dazed_and_C0nfused

xylophone said:

However one issue is that since your employed earnings are very close to the personal allowance, and TPS is a "net pay" scheme, extra pension paid via payroll will not benefit from tax relief because of the way this type of pension scheme works.

https://www.gov.uk/government/publications/pensions-relief-relating-to-net-pay-arrangements/relief-relating-to-net-pay-arrangements#:~:text=The government will pay a,direct to their bank account.

That doesn't apply though to anyone whose income exceeds their Personal Allowance.

In this case the op is receiving tax relief.