is 22 to early to start a pension?

sarahgal4

Hi. I am 22 and my boyfriend is 24. I am in charge of all our finances and generally 'shop around' for the better deals in life. I currently earn 21k a year with the NHS and am apparently automatically on their pension scheme (£95 a month). My boyfriend earns approx 28k a year and in his previous employment paid about £100 a month into a pension, when he left he was given no info on tracking this down. In his new employment their is no pension scheme and so isn't paying anything at present.

Just wondered a) whether we should officially pay into a private pension or pay into an annual isa each.

we currently bring home approx £2800 a month and after mortgage/bills etc are left with approx £1000 - how much of this should go in a pension idelaly and what are the best ones out there?

sorry if i sound a bit dim but been reading about and find it all very confusing to be frank.

cheers

sarah

meester

The NHS should give you a booklet about their pension scheme. It is a very generous final salary scheme that costs a lot of money (out of taxation) on top of your salary. You will want to check about qualifying years and so on. Depending on what job you can do I believe you can transfer the pension to other public sector jobs outside of the NHS as well.

Unfortunately the rules are quite complex, and they are changing in April. You can do things like buy extra pension (which is changing). The booklets are at http://www.nhspa.gov.uk/nhspa_site/library/members/index.htm but they are unlikely to help you that much.

It should be easy enough to track down the pension for the boyfriend by contacting the old employer and asking them for the details.

Are you getting married or else planning to stay together for life, because the savings will not be split on separation as you are not married.

The best thing to do with your spare cash is probably to put it in an ISA.

You can pay £14k/year (between the two of you) into an ISA, rising to £14.4k in April.

If you have that money to hand, you would probably want to open two cash ISAs now (before April 6th) for £3k each, and two share ISAs of £4k each.

As of April the cash ISA limit goes up to £3.6k each (per year running April 6 - April 5), so put that in then if you can. If you don't have the spare cash, then make regular payments of £300/month into each ISA (one cash and one share ISA each).

EdInvestor

You will be fine with your NHS pension, any extra savings should be put into your share ISA (which has the same investment options as a pension but is accessible and produces tax free income when you retire (your pension will be taxed.)

You can use a maxi ISA - all shares/funds/property/gilts of 7,200 a year

or a combo of half cash and half the rest, 3,600 each.

Go through a discount broker which rebates charges on the investments such as https://www.h-l.co.uk

Sobraon

You need to move fast on the NHS pension! Change in public pensions recently has been based on improving affordability ( ie reducing cost to the pension scheme and employers which means less benefit to you).

Suggest you ring NHS pensions up and see what options will become unavailable in April - as above these will probably be the most valuable to you. Particularly see if you can buy "past added years" for the 4 years since you were 18 (this feature disappeared from the teachers pension scheme 14 months ago).

As your boyfriend's employer doesn't currently offer a pension scheme it is worth reading the Isas v. Pensions 'sticky' on this board.