Newbie to pensions

edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning
3 replies 614 views
fairmorn308fairmorn308 Forumite
1.5K Posts
Hi guys this is a section on the forum i havent been into at all and i am looking into the future

I am 22 yrs old and in the middle of becoming debt free which will b before xmas and also in the middle of changing careers and industry for the better and then i will be alot more happier.

I am able to open my eyes and look forward for a change and one thing has crossed my mind is setting up a pension before it gets to late.

any advice would be great on the matter as i dont have a clue where to start.


  • dunstonhdunstonh Forumite
    107.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    We cant give advice here (or on any website for that matter). We can discuss options and give basic opinions and supply relatively generic information.

    However, when it comes down to provider and where to invest, that is advice and you need to make your own mind up if you decide to do it alone.

    Google will supply loads of information on pensions. For starters, look up:

    1 - stakeholder pensions. Defined charging structure with cap on charges. Because of that, usually relatively small fund selection and own manager funds offered.
    2 - personal pensions. Flexible charging structure that can be higher or lower or no different to a stakeholder over the term. Often has greater fund range available and additional features.
    3 - SIPPs. You get to choose what and where its invested from a very large variety of investment areas. Charging structure is usually geared towards larger contributions. The product is also geared towards the experienced investor and those that like to take a hands on approach.

    After you have looked up those 3, come back with questions.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • EdInvestorEdInvestor
    15.7K Posts
    Hello fairmorn,

    If you are a basic rate taxpayer and will not be receiving any employer payment into a pension, you might be better off at this stage to start saving in an ISA rather than a pension.

    The pension has numerous restrictions including lack of access to the capital ever,and lack of access to the income before 55 (for you),plus restrictions on how much income can be taken.Only 25% of your money gets tax relief, which many people think is not adequate to compensate for the restrictions.

    Also next year the rules will be changing so that you will be able to put large sums of saved money into a pension later in life as you get closer to retirement, thus picking up the tax relief if you think it's worth it.At the moment the position is different - if you don't use your pension allowance every year, you lose it.

    All in all, IMHO better to keep your options open with an ISA at present,rather than locking up cash for 30 years, as you will probably find that your more immediate priorities in the next 10 years will be saving for a deposit and buying a home.
    Trying to keep it simple...;)
  • EdInvestorEdInvestor
    15.7K Posts
    dunstonh wrote:
    SIPPs. You get to choose what and where its invested from a very large variety of investment areas. Charging structure is usually geared towards larger contributions.

    The new cheap online SIPPs have much lower charging structures (no annual fee) than the older versions which were very much geared to the better off.

    But it's difficult to get a SIPP to work well for people starting off with small contributions.They're a much better bet for older people who have accumulated a ragbag of small pensions from old jobs and want to get them all in one place and invest them at low cost, particularly directly in shares, gilts, commercial property trusts or low cost funds such as trackers/ETFs, where the low charges will be very beneficial over the long term.
    Trying to keep it simple...;)
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