AAArrrrrgggg- Please Help Me!!

Anya

???I'm starting to get worried now with all this pension talk that's flying around at the moment and I'm getting really confused!
We are a young married couple on a fairly low income with two young children. I want to start making provisions for our retirement and just don't have a clue where to start. I do know that there is no way that we can contribute enough each month at the moment to give us a decent annual income when we retire, and I heard that an ISA is now the best way to save for retirement. I have started an ISA into which we now pay a small amount each month but that is in no way going to be enough for when we retire.
If anyone has any advice at all, even if it is just to tell me where to start - I would be very very grateful coz my head is spinning!!![glow=red,2,300][/glow]

dunstonh

I heard that an ISA is now the best way to save for retirement.

For the vast majority it isnt although for a few it would be.

occupational pensions where the employer pays in are the best option. Do your employers have any scheme going?

Anya

No. It's my husbands employer and she was the one who said that she has done this ISA thing. I only work the weekends and don't earn enough to contribute at the moment.

dunstonh

The employer is daft using an ISA instead of a pension. The are tax and advantages for the employer with pension which are not present with ISA (there are also potential NI advantages depending on the type of ownership). However, that isnt your problem.

You dont have to be working or earning a certain amount to have a pension. You can pay upto £3600 per year into a personal/stakeholder pension irrespective of your earnings.

It is sensible to do your retirment planning jointly. ie, dont do all the retirement planning on one side. In retirement you can both earn £4745 a year without paying tax. This increases at age 65 (this is in todays terms). If the planning is lop sided, you waste that tax free allowance and that can cost you over £1000 year in tax.

We cant advise you what to do here but you should investigate your retirement options. If you dont feel confident about doing it yourself then seek advice from an IFA (not a tied advisor).

Milarky

Let me say however, without detracting from anything DD has said, that Anya has to be commended for having an ISA into which they make regular contibutions [That's a cash ISA, I imagine?] If you don't have a spare 3 grand sitting around each April then using whatever savings you can make during the year towards your annual allowances must be a priority.

DD, would you say that if a couple has less than £6K to save anyway that they can't justify saving into a pension? Or, if you disagree, where would you put the 'balance' [eg 50 percent ISA/ 50 percent pension?]

As to being confused, Anya, you are far from alone. My choice 'quote' comes from the Pension Commission First Report [published 12 October] is:

"Complexity: The UK has the most complex pension system in the world."

[Pension Commission Report - p210]

So don't worry, just take your time, but keep reading and gradually dispell your confusions!

Good Luck

dunstonh

DD, would you say that if a couple has less than £6K to save anyway that they can't justify saving into a pension? Or, if you disagree, where would you put the 'balance' [eg 50 percent ISA/ 50 percent pension?]

There isnt enough information here to make a suggestion like that.

If they are in their 20s, then a small contribution per month now into a pension would be quite beneficial. Then build upon it from there. However, building an emergency fund is also important, which the Cash iSA is ideal for.

If there isnt an emergency fund and we are looking at montly payments, I would budget between an annually increasing pension and a cash ISA. If there is debt, I would look at repaying that before commencing the emergency fund.

It is complicated but with different circumstances you get difference answers.

Anya

This is our situation...
My husband is 26 and has a full time job from which he earns about 13 500 before tax each year.
I am 25 and work 10 hours a week and earn about 3000 a year.
We have a 5 year old and a 3 year old so we then get child benefit and child tax credits which are about 3000 ish.
We obviously then have a current account that the wages go into and bills go out of, so we don't really have of spare cash to play around with.
We have a 50% share of a house and we rent the other half but are looking to buy a bigger share soon.
I have an ISA is my name which we opened when our National Savings account stopped, and that's our "back up money". Then my husband has an ISA which we have just started paying 40 pound into each month - this was what I thought would be a pension fund until I realised that it might not be the best option. The only debt we then have, other than the mortgage, is a very small loan which finishes in February, we've never had any credit cards etc. I would be quite happy to stop my husbands ISA in favour of a pension if that is the better option. :-/