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to be worried sick about pensions at only 33 and to ask if there are any MN who know about stuff like this?

(33 Posts)
MoomieAndFreddie Thu 01-Nov-12 16:08:47

or can anyone point me in the right direction as to where to get this kind of info.

i am 33 and have no pension, i worked FT from 18 to 26 but gave up work when i had my DCs at 26 and 29. i am mostly a SAHM but have started up a very small business, which isn't making any much of a profit as yet. mainly cos i work when i feel like it tbh blush is that really bad of me? I just love being with the DC and generally having a slower pace of life than i had when i was working.

DH earns enough so i don't really need to work (we are in the midlands so cost of housing etc fairly affordable). we actually have a pretty comfortable life tbh. he has a company pension but that won't pay out much, about £70 a week or something?

I have been thinking of paying into a private pension but what I want to know is what happens when I reach retirement age, how does it work? is whatever I have earned through a private pension deducted from my state pension? for example if my theoretical private pension paid out £50 a week, and the state pension was, say £100 a week, would I get £150 a week, or would I be means tested because of my private pension and only come out with £100? and do you get housing benefit or do you have to pay your rent out of the pension? because surely most peoples rent is higher than anything theyd get from a pension anyway?

if that makes sense?? and have no idea of the actual figures so the figures i have given are just for the sake of discussion blush

and people are saying there may be NO state pension in a few years anyway so what will happen to the people who haven't got private pensions? will they just be left with nothing? confused

sorry for rambling thread...as you can see i don't understand this kind of stuff at all, but have been stressing about it, so hope someone can make this a bit clearer for me.

BelaLugosisShed Thu 01-Nov-12 19:37:59

You are fine regarding state pension while collecting Child benefit, the problem comes when it stops and you no longer get HRP / NI credits.
I've recently upped my working hours so I now pay NI, I have to pay another 7 years to get full state pension. I haven't got a private pension, I have a very small one from working p/t for the local council that I paid into for just under 10 years but that's it.
Thankfully DH has a very good index linked military pension that he will get in 13 years time at age 60 and he has 4 other pensions from old jobs.
It's frightening to think that you need a pension pot of £100k for just over £100 a week.
When the mortgage is paid off (10 years and counting) we'll put the equivalent payments into ISAs so we will have decent savings when we retire, I think it's mistake to have everything in a pension, you can't guarantee living until retirement age, MIL died in the same year she retired and her pension died with her.

MoomieAndFreddie Sat 03-Nov-12 09:11:31

Oh look MN have moved this into Money Matters hmm i was wondering why i hadn't had many replies

ffs i put it in aibu for more traffic

god they fook me off, big brother is watching you.

But thanks for those who have replied, i actualy feel better about it now, its not as bad as i feared. But think i may have to get An Actual Job at some point. wink

Carmen17 Wed 07-Nov-12 10:18:20

Hi there, I'm a bit late to this thread but I work in this industry so just wanted to add a couple of things. Firstly, if you think you will still be renting when you come to retirement age then I would definitely start thinking about paying into a pension now because that suggests that your biggest outgoings will still be similar to what they are now and therefore you will need some money coming in to pay the rent. A lot of people think that they won't need a big pension because they will have paid off any mortgages by then so won't need so much money coming in.

I would definitely recommend talking to an IFA though and the best place to find one is at www.unbiased.co.uk. As another poster said they are often free because they get commission from the products they recommend (although they still have to give independent advice). If or when your company starts making a profit, It might be possible for you to set up a company pension scheme then you could potentially get tax relief on any contributions you pay into the scheme before paying yourself a salary.

Realistically if you do get a job, unless you start working in the public sector, you are probably only likely to get offered a defined contribution scheme which means that if the investments you choose in the scheme don't pay out very good returns, the pot that you have available to buy a pension when you come to retire might be smaller than you would like. However, if the investments you choose do really well, you could also get a much bigger pot. And again another poster pointed out that in most cases your company will contribute to your pension pot too so it is almost always better to have a company pension if it is on offer rather than just setting up your own personal pension.

Hope that helps a bit!

CogitoErgoSometimes Wed 07-Nov-12 10:43:29

"ffs i put it in aibu for more traffic"

You said 'can anyone point me in the right direction for more info'....

Gloriousconfusion Thu 08-Nov-12 00:56:24

All these investments are very worthy, and probably necessary, but do bear in mind that as the value of money goes down every year with inflation, many investments end up being worth less at the time you realize them (i.e. cash them in) than you would expect. For instance, the buying power of £10,000 today would probably be substantially more now than £10,000 in 20 years' time. So your investment needs to keep pace with inflation of, say, 3% a year, and if it makes less than 3% a year, it would actually be losing value, not just staying level with today's values. If inflation rises, the real value becomes less every year.

So it is probably worth putting some of your savings into things which are likely to increase substantially in price over the years and keep up with or surpass
inflation. For instance a house which was worth £1 million ten years ago would probably be worth double that today, and whereas houses of that value were rare then, they are now relatively common-place.

You might therefore like to consider buying some collectable items as an investment. You would also get some pleasure out of owning a work of art or beautiful art nouveau ornament. But you would need to do your homework first to make sure you are not buying a pig-in-a-poke.

youngermother1 Thu 08-Nov-12 01:56:02

From 1 jan, IFA's are not able to offer 'free' advice and benefit from the huge amount taken from your inappropriate investment. they will have to charge fees and really not worth it unless you have over £100k to invest and know nothing.

Investments/savings come in three sorts:

1. savings in a bank account - get interest (rates low at present) Can be tax free up to a certain amount in an ISA. These are likely to keep pace with inflation but have a guarantee from the govt (up to c£60k) if the bank goes bust.

2. Shares - either directly or in a OEIC (basically a lot of people give money to an investment professional who invests directly in shares - you get the advantage of his/her 'skills' and a mix of shares it would be uneconomic to invest in directly yourself). These charge fees but should, over the 30 years, give a better return than savings in 1

3. Anything else

A personal pension is option 2 above. the benefit is you get tax relief on the contributions, but you cannot access till a certain age and you are forced to buy an annuity (a fixed guaranteed sum per year rather than access to the capital). Currently £100k of capital will get you c.£5k per year pension

The basic rules are (for anyone earning less than £50k or less than £20k a year in savings), as mentioned by some people up thread:

1. If offered defined benefit pension grab with both hands and don't let go - worth at least 25% of salary
2. Contribute in defined contribution to the extent employer matches or betters contribution (additional salary)
3. if not in 1 or 2 then used ISA allowance - go cash until you have 3 months (joint) salary, then stocks and shares - use low cost trackers as best value
4. Once you have filled 3, can give to kids and their interest is tax free up to £100 pa - however this is their money, so you will lose it when they are 18 - not really savings, but useful if you intend to give them money anyway.
5. If 4 complete or not suitable, then general stocks and share investments - the additional tax cost is, IMO, worth the additional flexibilty of not having the pension restrictions.

option 2 could be 4% of salary, whilst ISA allows £11k a year per person (£5k in cash)

If you are saving in excess of £22k per couple per year, then you need more advice - worth paying for good stuff - choose a chartered account specialist rather than IFA.

IMO anything else (art, property, wine etc) only do if you are knowledgeable about that area - if not you will lose money

Notmadeofrib Thu 08-Nov-12 19:19:51

choose a chartered account specialist rather than IFA

Do you mean a chartered accountant? confused because you meet very few that can advise on financial products (not least because they can't legally advise and implement unless they take relevant qualifications). I'd never take advice from someone not qualified to implement their advice as frankly they are offering little more than opinion.

OR did you mean a Chartered Financial Planner... someone that has a degree level qualification in personal finance and investment. .. I know which I'd choose!

GrahamW Tue 13-Nov-12 15:07:47

There are most pension questions within all these messages, unbiased.co.uk will give you independant financial advisers within your area, and www.ethicalinvestment.co.uk, will give you independant adviser that focus on green and ethical investments in your area. Any adviser called "independant" after 31st December 2012, will offer a fee to arrange a pension. typically the fee will be around £500 to set up. The adviser will be able to answer all the questions above and also make sure the pension fits your situation.

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