Should I Pay Into My Private Pension?

laura122

Hi All,

I am 26 years old and have a relatively decent job earning a decent wage which puts me in the higher tax bracket.

It is quite likely that I will move abroad in the next 2 -> 3 years and live abroad indefinitely for the next 20 years returning to the UK in my early 50's.


My question is : Should I be making contributions to my pension now given that when I return I am likely to be eligible to pension credits if I do not have a private pension.


Any advice much appreciated....

dunstonh

What makes you think you will be eligible for pension credits when you return?

laura122

Well looking at the pension credit website :

Am I entitled to Pension Credit?

To find out if you might be entitled to Pension Credit, you need to add up your weekly net income (after deductions) and savings.

This means that the lower your savings and earnings the more likely you will be eligible for this.

dunstonh

If you also checked the pension credit site you will see that it doesnt currently kick in until age 60 and from 2010 it is increasing to age 65 in line with the female retirement age going up to match state retirement age. The state retirement age is also being increased to 68 in stages with 66 from 2024, 67 from 2034 and 68 from 2044.

So, you wont be eligible for pension credits until you are 68. Plus, that is over 42 years away. To plan your retirement provision on the basis of you wanting to earn less than £6450 (in todays terms) on rules that apply under the current system but are tweaked and amended and likely to be lower in the future (as the cost of provision is going to be too high to meet) is just crazy.

laura122

Dunstonh,

Thanks for the advice ...

In summary you are saying not to rely on this happening and as such to fund your pension as normal and on the basis that this ill not be available / not worth much in the future?

In one sentence the final pension from the state is not means tested, so other then pension credit is anything available to pensioners who do not have much in terms of assets?

EdInvestor

If you are going abroad it is well worth paying voluntary NI contributions (less than a tenner a month, real bargain) to secure your right to the UK state pension. By the time you retire, you can expect this to be significantly larger than it is now in real terms, as the two state pensions are being effectively merged, so an even better bargain, even though it will start a bit later. Buying the existing one would cost you around 160,000 pounds. Note that you will only need a total of 30 years NI conts to get the basic state pension when you retire.