Pension help - qu's

[shalalala]

I'm 32, earn a decent salary (£55k) but don't pay into a pension. Awful I know. Well I do now have a work pension which started when my company legally had to last year, but the amount going in is pitiful (think £60 a month or something)

The reason I don't have one is because I just don't know how to start setting one up. can anyone help please?

My work one is with The People's Pension if that helps. I think I can increase the amount I pay in to there, or I could set up a brand new one.

Please could someone give any advice?! It makes me so anxious not having one

Look forst at your employers scheme - do they offer to contribute if you do ? some match contributions so may be worth paying in extra there rather than starting another one

While the sooner you start paying in the better you are only 32 and retirement is 67 so you have time to build up a pot - contributions get tax relief (at the moment)

The fact that your employer has chosen peoples pension suggests they are doing the basics for auto enrolment and will be offering the minimum contributions in order to comply. But worth checking youremployer doesn’t match additional contributions you make.

Check if your employer has set up salary sacrifice. You are a high rate tax payer. If you can sacrifice additional contributions it brings your tax and ni down. If your employer doesn’t offer sal sac question it and see if they could implement this. They will make ni savings too by doing this.

Do you get a bonus? If so consider sacrificing a portion of this. Also brings down ni and tax. I am a high rate tax payer and sal sac addition pension contributions, bonus, childcare vouchers and pmi to bring myself down into basic tax bracket.

Look at your investment options. You may want to consider increasing your risk rating for higher returns. You are young so plenty of time to get some of the benefits of volatility before moving to lower risk options as you near retirement.

Don’t forget about the benefits of tax relief and compound interest. Saving as much as you can now will make a much bigger difference at the end.

You are in a good position I.e young with a good salary so you have a good chance of growing a decent pot for retirement.

A pension is the most tax efficient way of saving for retirement at the moment if you are employed and get employer contributions. Personally, i choose to pay into a workplace pension via sal sac rather than set up a personal one due to the ni and tax saving.

Unless you are going to be doing something very fancy the 85% equity fund in pleoples pension is just fine.

If your employer matches contributions, do that. If not, get a SIPP.

You will save tax at 40% and can also get out of Child Benefit Charge if you have kids.

If your employer matches contributions, do that. If not, get a SIPP

Why get a SIPP . There is no need for anything more than a personal pension and EVEN then, why? So she can choose funds and build a portfolio... just like the one offered by People's pension.

You'll find the charges on the people pension are MUCH less than hargreaves landsdown, AJ Bell and Fidelity. I could go on.

the tax will be saved, with salary sacrifice the NI willve saved. A SIPP will buy you some expense. Spend some time learning about investing, then think about something a bit more complicated - not trying to sound patronising, but it's not necessary right now.

Thanks all. Ugh I just don't know where to start in setting up a private pension?! Is shall I just increase my People's Pension by another £250/300 or so? Everything I read makes me more and more confused

I would, just make sure you're in the 85% equity fund and don't panic and pull it out when markets fall - they will, they do, it doesn't matter

Even if your employer doesn’t match contributions, investing in the pension provided by your employer via salary sacrifice (look it up if unfamiliar) will still save you national insurance I believe that’s 2%); if you don’t do it via salary sacrifice, you get the same tax refund but not the same national insurance saving. The concept is that the money you “salary sacrifice” is money that, in the eyes of the taxman, you have never earned in the first place, so no income tax and no national insurance contributions. What are the charges of the employer pension? It’s unlikely that the lower charges you could get elsewhere would offset the national insurance savings.

IMHO SIPPs make sense if you absolutely want the flexibility to invest in very specific securities (eg the shares of company X, rather than just a fund tracking the FTSE) and/or if you have a large enough pot to offset the fees. Stakeholder pensions like those provided by Aviva, Scottish Widows, etc, or platforms like Nutmeg typically charge a basic, all-inclusive fee that can range from 0.70% to 1ish % per year. With most SIPPs, you tend to pay some combination of a fixed fee or a % fee, plus dealing fee every time you buy a security (but many platforms offer regular investments at £1.5), plus of course the fees of the fund ETF trust or whatever it is you are buying.

Within a SIPP, you can buy ETFs tracking the FTSE or the S&P which charge only 0.07% per year. But you have to add all the fixed costs of the SIPP broker. With Scottish Widows or Nutmeg, you’ll typically pay an all-inclusive fee.