Desperately need some Pension/Retirement advice

user7921

Hi Everyone,

I’m really hoping that I can get some advice in here, or even just advice on where to get the best advice. I ‘know’ that I should have got a pension years ago. But, fear of doing the wrong thing has meant that I haven’t.

Here’s my/our situation.

I am 48 (almost 49). My wife is 56. We live in the UK.

My wife has a very small pension from some employed work that she did many years ago.

I have nothing other than £944.46 in the Nest (nestpensions.org.uk) scheme, from 18 months of employed work that I did during lockdown.

We have 2 limited companies. One turning over £50,000 to £80,000 each year. The second more like £15,000 to £20,000.

Our accountant keeps our income at the yearly personal allowance, so that our 3 children get the best benefits that they can for university etc.

A couple of years ago, we decided that we ‘must’ do something about this. So, I started holding back £200 per month while we decided what to do with it. We spoke to 3 financial advisors and ended up just as confused and unsure what to do. So, we did nothing and the small pot of money has just been gathering.

The thoughts that stop me/us ...

- It’s too late
I know ho irrational this is.

- Who to trust
Obviously financial advisors have their own motives for suggesting different options.

- WHAT to do with the money!
Some people advise to take money out of the business and put it into ISA’s. Others strongly suggest having the limited companies pay our pensions. But, even then .. where .. which?

- Fear of an upcoming recession
I know that having money invested for a long time is generally fine in the long run. But we keep being told about an impending deep recession. Because our investment will be much shorter than ideal, what if starting a pension now puts us in an even worse situation than we would have been without one?

Can anyone here help us out of this?

If there’s more information that required, I’m happy to answer any questions.

Thanks

El_Torro

The sooner you start paying into a pension the sooner you will start building up a pot and the bigger it will be when you retire.

You probably know the above already. I'm not sure what else there is to say though. You know you need to start and you know that the longer you leave it the worse the problem will be. 

What exactly is stopping you? The volatility of investments? You already know that over the long term investments will almost certainly beat cash. 

Talking to an IFA might be a good idea. However depending on how many assets you have that you are willing to invest an IFA may not be interested in doing business with you. 

Linton

Independent Financial Advisors cannot receive commission  etc from the companies they recommend.  They get paid for advice, and if the advice turns out to be inappropriate they can be sued. By definition they must have access to the whole market. So if you make sure you are talking to an IFA rather than a plain FA you should be OK. IFA is a protected job title so there should be no confusion.

LHW99

If you run a limited company the company can pay up to £40,00 per year into a pension (not sure if that changed when the AA changed) for you and get corporation tax relief on it.

dunstonh

- Who to trust
Obviously financial advisors have their own motives for suggesting different options.

FAs are agents of the company or companies they represent.  Often referred to as sales reps.  IFAs are independent and are employed by you to give you best advice.

Some people advise to take money out of the business and put it into ISA’s. Others strongly suggest having the limited companies pay our pensions. But, even then .. where .. which?

Paying all that tax to put it in an ISA would be daft.   Pension easily beats ISA for retirement provision.

I know that having money invested for a long time is generally fine in the long run. But we keep being told about an impending deep recession. Because our investment will be much shorter than ideal, what if starting a pension now puts us in an even worse situation than we would have been without one?

You are probably going to see another 5 or 6 recessions.   However, markets do not always go down in recessionary periods.   And recessions do not always occur as a result of an economic crisis.     However, market drops are great news for people paying into investments on a regular basis.   So, don't think about short term events.

If you run a limited company the company can pay up to £40,00 per year into a pension (not sure if that changed when the AA changed) for you and get corporation tax relief on it.

60k now and in the case of the OP, theoretically £180k as they have carry forward available to them.  However, net profit and available funds will mean the optimal amount will be lower.

xylophone

If you run a limited company the company can pay up to £40,00 per year into a pension

Rather more than that......

https://getpenfold.com/pension-guides/how-much-can-a-company-contribute-to-a-directors-pension

https://www.hl.co.uk/news/articles/archive/pension-contributions-that-work-for-business-owners  ( released before last budget so AA not accurate)

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

If you need an IFA you could try

https://adviserbook.co.uk/

Tick "confirmed independent" and other options required when the menu comes up.

xylophone

And have you both obtained State Pension Forecasts?

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

Albermarle

I know that having money invested for a long time is generally fine in the long run. But we keep being told about an impending deep recession. Because our investment will be much shorter than ideal, what if starting a pension now puts us in an even worse situation than we would have been without one?

When you retire, you probably will not want to take the whole pension pot at once, and ideally you will probably want to withdraw from it slowly over many years, decades even. So that means your investments in a pension may well still be invested when you are much older, so your investing time frame is much longer than you are thinking.

But we keep being told about an impending deep recession.

It is all speculation as nobody knows what the future holds. If the financial markets really thought a big global recession was inevitable, then share prices would have crashed already.

In the last 12 months UK stock market is up 10%; Europe 20% and US 17% . Although they have been moving sideways for the last few months probably reflecting some uncertainty about what the future holds.

Phossy

Give this a watch on why you should not concern yourself about a stock market crash.

 https://youtu.be/-6nVyMFAW1M?si=JFlX8nivY5Ce0vDd

He has lots of other good videos on tetirement planning too

Bostonerimus1

I think you need to be investing in some UK and Global equity index funds or multi-asset funds. The question is how you do that and you have 3 options; a general investing account; an ISA or a pension. The pension is best for long term retirement planning, but you'll need a salary for that so the question really becomes how much salary vs dividends you pay yourself and how that affects your benefits and tax situation. You should also consider your state pension position and see if paying Class2 NI would be a good thing.

user7921

Wow. Thanks for all the advice, everyone!!