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Pensions...where do I start?

(6 Posts)
Badvoc Thu 11-Oct-12 13:43:42

I just turned 40 and figure I have 20/25 years to pay into a pension.
I am a sahm and don't see me working anytime soon (lots of reasons)
As such my contributions would not be huge...I am talking £30-40 per month.
Worth it?
I had a private pension with pru back in the day but it would have been in my maiden name...

CogitoErgoSometimes Thu 11-Oct-12 14:15:59

Probably worth talking to an IFA and going through the options. A small amount like that might get eaten up in charges, even with the tax contributions on top. They may have some other ideas on how you can save efficiently for your old age.

AshieFan Fri 12-Oct-12 15:12:31

Am in a similar situation to you.

Yes, totally worth it. Every pound you put in now is going to make a difference to when you retire. You may not have huge pension pot but at least it will be something and you do not want to rely on state pensions alone.

Don't forget, you will be able to transfer in the value of your Pru pension into your new pension so that will make a difference too.

(Will write more later - did not realise the time!)

carolinemoon Thu 18-Oct-12 19:26:16

Personally, for such small amounts I wouldn't choose a pension, as the eventual payout would produce a fairly tiny pension. I would choose a cheap stocks and shares ISA, you don't get tax relief in the way in but you won't pay tax when you take the funds out. If you feel the need at retirement you can still buy an annuity (pension) but are not obliged to. I'm a big fan of pensions for higher rate taxpayers, but for basic rate (or non-taxpayers) I'm not sure the sums add up given the lack of flexibility and hidden charges.

Notmadeofrib Thu 18-Oct-12 20:48:55

there are no more hidden charges in a pension than an ISA! ... cash ISA's also suffer the silent killer over 25 years that is inflation.

the pension will give you a tax rebate on up to £3600 contribution per year, meaning you only pay in £2880 but the pension is made up to £3600.

ISA's offer very little benefit to a non tax payer... you don't pay tax so there is anything to save! It's taxed money going in so acutally unlike a pension there is a cost. You've also paid NI on it too (if you earn beyond the LET)

A pension is inflexible (you can only access at 55 orr over), but the new changes meaning that EVERY employer will have to pay into a pension to workers regardless of their earnings will mean small pension pots will become more common and there will be more solutions beyond the triviality rules that are currently available I'm sure.

Saving in some form is def worth it. I'm not saying pensions are the only nor the best way, but the conspiracy theories are not really correct!

AshieFan Thu 18-Oct-12 23:33:34

Have you looked at stakeholder pensions? For every 80p, the govt puts in (thru your pension provider) 20p. Also, you can go for medium to high risk investments within pensions to begin with and then as you get closer to retirement, move your money to lower risk investments. Most stakeholder pensions are very flexible eg payment holidays, put extra money in etc but the money is locked away till you are at least 55 years old! All employers will need to pay into a pension for employees, as above poster said, but it's being rolled out over a space of a few years by size of company (no of employees) and you can choose to opt out of it

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