Anyone else with virtually no pension?

[Yogapoga123]

Cheery post for the weekend

I’m 49, and have pretty much zero in my pension pot. Wonderingly if it’s now really too late to start - there seems little point at my age unless you can afford to squirrel away £400+ a moth. Which I can’t!

I’ve never earned enough to put anything significant away. Anyone else in a similar boat?

If you are planning to downsize and use equity released to pay into a pension, be aware there are limits on annual amounts which can be paid in and attract tax relief. You can carry back 2 years but the limits have been falling so just one to be aware of

@CayrolBaaaskin

Set worth starting now - pensions freedoms means it’s like a savings account but with huge tax advantages. You should be able to take anything out when you’re 55 so we’ll worth saving just now

For OP, with only 6 years to go from 49 to 55 this isn't really enough time to benefit a lot. You'd be much better to wait until 65 at least. Plus of course you will have paid much more in.

45, single mum, don't own property and have only been paying into my pension for just over 2 years and I'm part time so it won't be worth much.

I have savings but I really need to get them into property to mean anything for the future and I don't earn enough on paper to get a mortgage despite the fact it would be cheaper than the rent I pay.

Definitely 3am worry zone. I'm trying to get work to increase my hours so a mortgage company would look at me but no luck yet. It is scary

@MichelleScarn

I have work pension (nhs) but have heard a rumour that by the time its time for me to reach state pension age in just under 40 years those of us who have private/occupational pension won't be able to access the state pension!

They would have to give warning of a change of system for future UK citizens ie from X date , your NI contributions will no longer qualify you for a state pension eg. or from Y date your Occupational Pension scheme contributions will be increased to include the State Pension element. I don't think they could just confiscate people's state pension funds. You could imagine the uproar! I can't see any Government getting away with it as there would be multiple Union backed Legal Challenges for fraud, embezzlement etc.

@Yogapoga123

Thanks for the replies. It seems like there’s a few of us in the same boat. It’s scary, yes. It’s the one thing that really keeps me awake at night, the 3am fear.

Even though I get the tax advantages of a pension, what I’m not sure about is pension contributions and what that’ll actually amount to. I put in £100 a month to my employers scheme - I think this is the People’s Pension, I’m embarrassed to admit I’m not sure - but really, what’s that going to translate as, in the end? I think I come from the generation where pensions were generally mistrusted. Somehow that view has become a bit outdated though.

They should be giving you an annual illustration of what your pension might give you at your normal retirement age - 65? If not ask for one. £100 a month is really low. Now is the time to be ruthless.

You need to be prioritising retirement NOW. Go through your net income and unavoidable bills - Utilities, rent/mortgage, travel, food etc. Make sure you're not frittering money away on clothes, takeaways etc.

Aim to save the bulk of the rest. You need to build up an emergency fund of say £1-2k minimum then put the rest monthly into a pension and/or investment ISA. The advantage of setting up a direct debit into one or both of the above is you don't keep having to remember to save.

The advantage of regular savings into an investment ISA is that it is accessible if absolutely necessary. ( Though it would be negating the whole point!) Also the income you get from it is tax free whereas income from a pension may be taxable if it brings your income over the annual tax free allowance.

At retirement you just list all the different schemes and get a quote from an IFA ( Independent Financial Adviser ) who will find the best annuity rate for you according to whether you want an annual rise at a fixed rate, RPi etc

It doesn't have to be an annuity. You can have a flexible draw down pension, or take out lump sums etc...all best discussed with an IFA.

Juliecloud If you were claiming Child Benefit you will have been credited for NI contributions during those years.

@mummytonicekidz

Thai does worry me as I am a stay at home parent to my dc.

You don't say how old your children are. If they are of school age my advice would be get a job, ANY job, train for something and save.

My mother's advice ( she came through the Depression, working on 75% of men's salary, supporting numerous aged/unemployed relatives, deserted by her husband etc.) was DON'T ever give up your job. This is best advice I can give women too.

@SingleHandSue

I’ve only got a bit of a NEST pension, DH has an ok-ish work pension. We rent and have zero savings.

Our plan for the future is to be unhealthy enough that we are dead before we hit 65. We can’t afford old age.

Ah, the head in the sand philosophy!
Met it often. Yet the very same people still seem to want to live when they get to 65! I expect you will too.

With 2 of you working try and save. This is the classic 'It's a painful topic, let's not think about it ', defence.
What do you spend your money on? Can you restructure spending ? Less on holidays, cars, clothes, presents whatever - more on saving?
You don't say how old you are but if at all possible try and bust a gut to buy your own place - however small. Can you rent a smaller place now to help save ? Rent is a killer in retirement.

Glad your husband has a reasonable pension ( I hope you are correct). But, what happens to it if he dies before you? Do you get half or nothing?

I would not have a pension like you but luckily I've worked in the NHS all my working life so have a 30 year NHS pension and I'm also panicking now I'm 60 and squirelling away £400 a month for retirement.
I live in a rural area and I'm going to need a car so I have to be able to afford to run a car and have money for things like boilers breaking down.

@jeannie46 - op will benefit immediately from every penny she puts in her pension savings even if she takes it early because she will save free of income tax. Obviously the longer she leaves it in the longer it will grow but there will be an immediate benefit v an ISA or other savings product as her savings will get a huge tax relief boost straight away.

it is worth noting that in the past 20 years the value of the state pension against average earnings has dropped from 25% to 20%.

Given that we are going to be paying off the Covid debt (alongside the already existing debt from 2008 crash) for the next few decades, I really can't see that going up in the next 20 years.

I don't think that solely relying on the state pension is a good idea in the future, and anything you can do to build up your own nest egg could be difference between surviving, and enjoying your retirement.

@jeannie46 - also it is pretty likely that future governments will means test state pensions. It’s a state benefit and they can change it at any time like every other benefit. There would be no legal basis whatsoever for any claims of “fraud” or “embezzlement”.

Also @jeannie46 - to clarify there are no “state pension funds” to “confiscate”. State pensions are paid from general taxation.

@Hopeisnotastrategy

For those who aren't working, everybody is entitled to pay up to £2,880 pa into a private pension and get tax relief on it. Currently this means on the full amount the government would add another £720, bringing the annual amount you can save to £3,600.

I’m really interested in this but could you tell me more?

I’m mainly a stay at home mum but have a part time job.

Am I right in thinking if I open a private pension and pay some in the government will pay something in too? How could I go about doing this?

Thank you in advance for answering

There would be legal claims via age discrimination though.

I like the retirement answer man podcast by roger Witney for inspiration. It’s American so you have to ignore any technical advice but the inspiration is help

As mentioned yesterday, I had a phone appointment with the pensions advisory service the other day, and they were so helpful. It’s free advice, totally objective and non judgemental. I was on the phone for about 40 min, and they then sent a summary of things to do next, and the following links:

have attached your summary document as promised and also have the following spotlight publications which may help :-

www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Pension_saving_for_self-employed_and_small_business_owners_Spotlight_v4_January_2020.pdf

www.pensionsadvisoryservice.org.uk/content/knowledge-bank/Saving_into_a_pension_SPOT024_v4_January_2020.pdf

www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Spotlight_Annual_Allowance.pdf

www.moneyadviceservice.org.uk/en/tools/pension-calculator

www.pensionsadvisoryservice.org.uk/content/publications-files/uploads/Spotlight_State_Pension.pdf

^Could you take training for a better paid job? Not really my area of expertise but you can work as a Classroom Assistant and train to become a teacher maybe. Or, if you haven't had a grant etc ever you could train as a nurse etc etc. Look into it - there are Access courses at Colleges to help you into training / degree qualifications in a range of areas. even if you haven't got standard qualifications. They have advisers you could talk to.

With 13 years out you really need to be looking at FT work from now to retirement. I guess your children are either in Secondary or near finishing Primary School. After / Pre school clubs etc. might help you cover any hours before you get back from work.^

Thanks for taking the time to offer advice @jeannie46. I already have a degree so I believe there's no chance of getting funding to do another one. There's also no chance of me working full time (child with SEN). I am thinking about what training I could undertake that wouldn't cost a fortune.

@ilovepuggies Yes it’s exactly as @Hopeisnotastrategy says. If you open a private pension then whatever you put in automatically gets topped up by an extra 25%, so e.g. you pay in £800 and the government pays in £200. It doesn’t matter whether you earn enough to pay tax or not. The extra money arrives a few weeks after you pay yours in.

There’s an upper limit to how much you can pay in, and you have to keep an eye on that - the pension company doesn’t check it for you. It’s £2880 if you’re not earning, and your pre-tax pay if you are (up to £40,000).

@ilovepuggies To set one up, look up SIPPs - there’s loads of info online.

I don't have a pension. I thought they'd have been pilfered away by the time i reach retirement age. I'm relying on downsizing from family home in Home Counties to small cottage far away. And carrying on working for ages, part time, which I'm happy to do as I love my job.

Other posters are right it won't be immediate stop to the state pension but they are already preparing for it, by introducing the auto enrollment pension recently.

Basically according to previous financial reports by 2036 the number of workers to pay for those collecting pensions isnt sustainable.

The way to phase out state pension is ny ensuring workers have their own private pensions and those payments tmknto it increase.

The other option is means tested but it'll be political suicide to do that and yes it can be challenged in law but didn't the women recently lose their legal challenge over the age change. I wouldn't hold put hope of winning any legal challenge.

@stampsurprise

No pension and 52. Work freelance.

Going to use equity release of house for money as no one to leave it to.

Should add house isn't even paid for yet!

@Labobo

I don't have a pension. I thought they'd have been pilfered away by the time i reach retirement age. I'm relying on downsizing from family home in Home Counties to small cottage far away. And carrying on working for ages, part time, which I'm happy to do as I love my job.

If you have a personal pension plan it can't be 'pilfered away' from you unless there are extortionate charges which exceed returns.

[quote BobbingPuffins]**@ilovepuggies* Yes it’s exactly as @Hopeisnotastrategy* says. If you open a private pension then whatever you put in automatically gets topped up by an extra 25%, so e.g. you pay in £800 and the government pays in £200. It doesn’t matter whether you earn enough to pay tax or not. The extra money arrives a few weeks after you pay yours in.

There’s an upper limit to how much you can pay in, and you have to keep an eye on that - the pension company doesn’t check it for you. It’s £2880 if you’re not earning, and your pre-tax pay if you are (up to £40,000).[/quote]
Is that something you could do as an extra pension or does it have to be your only one?

Saving is so fruitless when interest rates are so low but my pension is for my part time teaching so very little going in and I wondered if I was allowed a second one.