To think 53 is too late to start a pension plan?

[probablystuffed]

Has anyone started one this late? Is it worth it?

There is no mystery to pensions. Pension funds invest in stock market based shares etc. These hopefully rise over the medium term.

To encourage people to save, pension payments come out of your pre-tax earnings.

Keeping money "under the mattress" so to speak costs you lost investments you don't make.

Private pension funds are not going to go bust (forget Maxwell era stuff, that was a whole different era).

Ultimately you only really get back what you put in - the main benefit is the possibility of beating inflation and the tax saving.

@Nikhedonia

Please don't listen to the posters who say it's not worth it, or that you need financial advice.

Contribute as much as you can afford to give away (you won't be able to access the pension until you are at least 55).

Are you talking the piss?

Please don't listen to people saying OP should take advice?

That is, frankly, an outrageous thing to say!

Yes, OP could easily set up a pension without advice but she's now at a point in time where she could very well get back less than she puts in, dependent on her own longevity. It very much is worth taking proper advice, if she so wishes.

Honestly, this place is pissboiling at times with the "...please ignore everyone except me..." posts.

Have a look at NEST online - yes the government top it up too.
I paid in for a year when I was SE and then transferred it to my employee pension scheme.

Pay into a nest account. As much as you can OP, each month or when you get paid. You're doing the right thing.

www.nestpensions.org.uk

@SuperSara do you understand how expensive financial advice is? Do you know that the fees of a financial adviser would outweigh the benefit of a £25 pcm saving and it would actually be unethical for a financial adviser to charge their fees in that situation.

There's tonnes of free guidance and tools online to support the OP,

Ignorant posts telling people to get advice when they have no idea how expensive advice is piss me off.

@supersara while advice would be best it’s an expensive option and there are other resources out there which the OP could consider first. I’m not sure it’s outrageous to point those out.

OP - you could speak to PensionWise who won’t charge a fee and will give you the options. It might be right to take advice after you’ve done that - but it might be enough and could save you money (which could go into your pension).

I work in pensions. you will get best tax relief from using a pension over an ISA. You’d really be looking to try to contribute as much as you possibly can. So £25 pcm won’t help.

Worth understanding your other assets - property, cash, business you can sell too. If the pension is going to be your only income then you need to be using a cautious investment approach.

Elissandra

What other personal pensions are there?

Investing isn't that hard, so much information to hand on various fund's etc.

I definitely need to seek advice, I don't understand any of the financial lingo. I just had to google what an isa was and what annuity meant.
Yes, I have a masters degree, how embarrassing.

Apologies, just realised a few people have asked about my house. Yes we own it outright but are unlikely to downsize.

@probablystuffed most financial advisers wouldn't offer you advice based on the amount you are suggesting you could afford to save.

Have a look at the Money and Pensions Service, lots of free guidance and support on there.

Do you have any savings at the moment? If so, say if you have £5000 salted away, could you empty half straight into a new pension to get you started?

(I’m self employed too, and have only about £40k in my pension so far, but I’m currently adding to it as hard as I can)

So you can pop a lump sum into a pension? Sounds good but risky?

I am self employed and I am 53, 54 this year.

I spoke to an Independent Financial Advisor and now have a much better idea if where I am financially.

He talked me through a lot of possibilities, pulled together a few existing, old pension pots from previous employment, opting out etc, and set up a new pension for me. Monthly payments I can afford and an easy way if topping it up if I want to / can.

I feel really virtuous and quite relieved. It is well worth the time.

Good luck

@CuriousaboutSamphire he recommended that you opted out of your workplace pension?

I started a pension really this year at 48. I left it because I didn’t understand them . I am putting away £200 a month . I doubt I will have an amazing lifestyle however I will be in a much better position than if I did nothing.

Yes, you can, and the immediate risk is reduced by the fact the government add the extra 25%, so that cushions any small drop in value.

I have paid about £27k in to get the current £40k, by the way. I don’t think your DH can claim the same for his mattress.

Sorry, missed the last posts

You don't pay an IFA up front. Many, the good ones, don't charge until they sign you up, so you get initial advice, signpost and suggestions for free. Then the pension provider pays them a % or fixed fee.

Yes you can pay in a lump sum. Yes the government give you 20% tax relief (depending but the IFA will give you specific details)

You have nothing to lose by seeing an IFA except some time

@nikhedonia, you misread me.

I am NOW self employed. He suggested some OLD pension pots were left where they were and amalgamated others. It depended on the costs involved.

@drasticaction - the ones that aren’t SIPPs!

www.money advice service.org.uk/en/articles/self-invested-personal-pensions

I’m not disagreeing that people can learn to invest, but this OP is coming from a base knowledge of not knowing about tax relief or that you can pay lump sums. So I don’t personally think that actively managed investments is the way to go to begin with.

www.moneyadviceservice.org.uk/en/articles/self-invested-personal-pensions

first thing you should do is get your personal forecast of what your state pension will be.
www.nidirect.gov.uk/articles/forecasting-your-pension

It will say how many qualifying years, where you paid or were credited, with sufficient NI contributions, and how much your state pension is forecast to be. You may be able to make up gaps. You may spot errors so they can be corrected.

Your pension income is taxable. If you expect it to be less than (current value) £12,500, that won't matter since you won't pay tax.

If it is likely to be more, or higer rate, you might consider an investment ISA, since ISA income is not taxable.

You will get the tax rebate on contributions to your pension, where you pay in £80 and it turns into £100, but there is no tax rebate on contributions to an ISA. The result is that pension contributions are particularly good value if you will be paying tax at a lower rate, or not at all, after you retire.

If you have your own business it is worth making the contributions from the company, and reducing your salary by the same amount, because there are then no NI contributions due on the amount the company pays.

OP, you’re streets ahead of someone who hasn’t even thought about pensions, or has but has then buried their head in the sand! Don’t be embarrassed.

Yes, you can pay in a lump sum.
I can phone my personal pension provider (I use Aviva, Hargreaves Lansdowne and Standard Life as I’ve got a few!) and just pay in giving my debit card number. It’s that easy! Others have mentioned the maximum (£40K pa or your annual earnings, whichever is lower, though there are some carry over allowances too).

As to the risk...

Yes, investment is risky. But when you choose a pension provider, you will also decide your risk profile. An IFA would ask you questions to help you work out how risk averse you are. That’s partly your personality but also your circumstances!

As an example, I’m a fairly cautious person. Quite “bird in the hand”. But, I have a work pension with a guaranteed value as well as my personal pension. So I’ve opted to go higher risk on the latter - because if the market crashes, it’s not the only money I am relying on. When I choose funds in the personal pension, I choose ones rated 4 or 5 out of 5 on Aviva’s own risk rating. Then, I let the Aviva fund managers decide where to invest it. They could buy high risk start ups in a new industry, or buy some government bonds with a very low but guaranteed return - depending on what risk level I have suggested.

Could you still lose on low risk? Yes.
But if your money is under the mattress, it will be degraded in value over the years by doing nothing. Not even a risk - that’s pretty much fact! So don’t be scared of the idea of risk. If you do nothing else with the “mattress money”, but Premium Bonds. There’s no interest, but you might win something!

Start by reading the Money Advisory Service website - pensions aren’t as complicated as you think before you start researching!

Thanks so much. I honestly don't understand most of the MAS website but will take it slow and try to learn. At present, I pay very little tax and am a sole trader

Dont ISAs have very little return?