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Taking out a pension on a low income

(16 Posts)
Sixisthemagicnumber Tue 22-Nov-16 08:02:42

I don't currently work. I am a full time carer so I get £63 per week carers allowance. I had a pension when I was working in my previous job (over a decade ago) but The pension was attached to the job so no contributions have been made since I stopped working. That pension fund isn't worth very much at all.
I want to start a private pension. DH is working and he pays into a pension but I would like my own. DH wants me to have this too. We won't be able to afford huge contributions. Would it be pointless to start a pension if I can only afford about £70 per month? I am mid thirties. I'm quite worried about coping in retirement should DH die before me and his pension fund is used up.

specialsubject Wed 23-Nov-16 12:21:22

Every little helps! Do check charges and shop around, but get started. Also see what can be done with the existing fund, and check your state pension entitlement is also accruing. If there is such a thing in the future of course.

Sixisthemagicnumber Wed 23-Nov-16 13:55:05

Thanks for the response.
I am supposed to have full NI contributions as a registered carer in receipt of carers allowance and I am supposed to get second state pension contributions too but I don't think that they will be relevant by the time I retire in 30+ years. I have some debts that are soon to be paid off and I think I will open a private pension as soon as I have paid them.

Sunseed Wed 23-Nov-16 15:02:43

Even though you're not working you can still claim basic rate tax relief on your contributions, up to an overall limit of £3600 gross per annum. So that £70 per month will be £87.50 in the pot.

Sixisthemagicnumber Wed 23-Nov-16 15:26:36

I didn't know that sunseed. I assumed because I'm not paying tax that I wouldn't get the tax relief on pension contributions. That's really helpful.

Sunseed Wed 23-Nov-16 18:54:54

Yes, it's available to anyone under 75, so really useful for children's savings too if happy to lock away until age 55.

Sixisthemagicnumber Wed 23-Nov-16 20:26:54

Thanks sunseed. I looked to the tax relief and you are right. Whilst looking into it I also discovered that if I choose the right sort of pension I can deduct my contributions from my income (my carers allowance) for tax credit purposes. We do get a small amount of tax credits even though DH works full time because one of our children has a severe disability so we get enhanced tax credits. Considering the tax relief and the tax credit situation combined I think I should definitely start paying into a pension. I have been very worried about how I will
Cope in retirement, particularly if DH dies first (sorry to be morbid) and his pension fund is used up. It is very reassuring to think that paying into a pension might be a lot more affordable than I thought.

Sunseed Wed 23-Nov-16 21:36:27

You might want to look into a life insurance policy taken out on your husband's life to bridge any shortfall if he dies too early, so to speak.

Sixisthemagicnumber Thu 24-Nov-16 03:32:24

We have a decent life insurance policy which covers us both. We took it out when we took out a mortgage.

Ifailed Thu 24-Nov-16 05:07:43

With pension/annuity rates pitifully low at the moment, I do wonder if it's worth putting a small amount away in a pension pot. However, if you can afford to save a small amount, and accept you'll get little interest, this could be a very handy cushion for those events life tends to throw at you when you can least afford them, and could be put into a pension at a later date if things turn around.

BigFatBollocks Thu 24-Nov-16 05:14:12

Place marking as I am in a similar position to OP.

Ifailed Thu 24-Nov-16 05:23:42

Just a thought, but does your DH's employer match what he puts into his pension? If so, it would make sense to pay extra into that. Don't forget that as you are married it's not his pension, it's shared.

Sixisthemagicnumber Thu 24-Nov-16 06:44:37

ifailed with savings rates so pitifully low it would be better for me to pay into a pension especially when I consider tax relief and the situation with tax credits. Effectively, the money will be topped up by quite a bit of I put it into a pension fund. And I am aware that DHs pension belongs to both of us as we are married but when you read the small print it does say that the spousal element is only paid if the pension fund hasn't been used up before the pension holder dies. DH is a little older than me so I have to be realistic about the fact that he could die before me and there might be no money left in his fund for a spousal payment (of course k could die first though). In any case, his pension is not currently with his employer so he isnt getting any contributions from his employer. His employer plans to open a pension scheme soon (when it becomes law for small employers) but from what I have read they only plan to pay the basic minimum into employees funds and won't be matching contributions that employed choose to make over and above the minimum.

SoftlyCatchyMonkey1 Sun 29-Jan-17 10:27:18

Why don't you have a conversation with a local independent financial advisor. I arranged my own personal pension through one. He was really informative, and you only pay when you take the product so to speak, but the advice would be free.

allthebestplease Sun 29-Jan-17 14:37:02

I understand your situation, however I think it would be better if you put all available funds into an ISA you get tax relief on the exit of the money whereas that's not the case with a pension. Plus you can use the money when you like, should your husband die early. Whereas with a pension it's locked in. Plus put into a stocks and shares isa as the return is greater than cash. A pension pot would use stocks and shares too.
I use fundsmith. I opened a stocks and shares isa with them and is growing very nicely.
So put what you can away in an isa.

JoJoSM2 Sun 05-Feb-17 23:19:50

Have a look at the lifetime isa that is coming in from April - might be a good option for you.

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