50 and no pension - where do I start?!

BobTheNailer

Hi All, 

As the subject, I'm 50 and I have no pension (well, I do have a very small one from my early 20's with about 4.5k in it IIRC). I want/need to start saving for my old age.

I'll be looking at putting about £800 a month away for this. 

I'm a contractor with my own Ltd company, so I'm on minimum wage and take most of my income as dividends.

Am I best getting an actual pension, or saving in other way (ISA?)

Cheers!

dunstonh

Am I best getting an actual pension, or saving in other way (ISA?)

Pension beats ISA.    And in your case, even more so than normal as you can treat the pension contribution as a business expense, which lowers your corporation tax and you get money out of the company without suffering dividend tax.

I'm a contractor with my own Ltd company, so I'm on minimum wage and take most of my income as dividends.

Your salary shouldn't be linked to the minimum wage.  It should be linked to the primary threshold, which happens to be the personal allowance at the moment.  Minimum wage does not apply to you.

Bostonerimus1

Start by doing a budget to see if you can save anywhere to increase the amount you can invest. You've got some time yet, but maximizing what you put in now to pensions and ISAs is important. You might want to talk to your accountant about pension options and also check your NI record.

Marcon

dunstonh said:

I'm a contractor with my own Ltd company, so I'm on minimum wage and take most of my income as dividends.

Your salary shouldn't be linked to the minimum wage.  It should be linked to the primary threshold, which happens to be the personal allowance at the moment.  Minimum wage does not apply to you.

Sounds as if OP might not have had the benefit of help from an accountant...

OP, see https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions to understand why this is important in terms of NI.

BobTheNailer

Thanks All.

To be honest, I've always just presumed I was paying myself minimum wage, as it's so low! I just do what my accountant says. 

For NI, I have checked my state pension forecast before (and again just now), and it says I'm fully up to date to receive the max possible.

I will speak to the accountant, thanks to dunstonh for the tip regarding the contributions being a business expense.

Altior

It's a little unusual that your accountant has not observed that you don't have any expenses for pension contributions. 

LHW99

dunstonh said:

Am I best getting an actual pension, or saving in other way (ISA?)

Pension beats ISA.    And in your case, even more so than normal as you can treat the pension contribution as a business expense, which lowers your corporation tax and you get money out of the company without suffering dividend tax.

Am I correct that the OP needs to pay the pension contribution directly from the Ltd Co, not as a personal contribution?

dunstonh

LHW99 said:

dunstonh said:

Am I best getting an actual pension, or saving in other way (ISA?)

Pension beats ISA.    And in your case, even more so than normal as you can treat the pension contribution as a business expense, which lowers your corporation tax and you get money out of the company without suffering dividend tax.

Am I correct that the OP needs to pay the pension contribution directly from the Ltd Co, not as a personal contribution?

Correct. It needs to be an employer contribution.   That is the phrase used for company contributions.   The OP must not make personal contributions as they are less tax efficient  (caveat - there can be unusual circumstances where that is not the case but the vast majority of shareholding company directors would make employer contributions)

penners324

Plenty of pension firms where it's easy to set up an account for this purpose.

PensionBee and Penfold are 2 of those