Please help me start a pension!

[GettingOrganisedNow]

Ok, I need some help. I've never been in a position to start a pension, until recently. I'm now 44. I do have full state pension contributions (I kept up with the full rate of NI contributions even when I wasn't working) but I haven't been employed (mixture of unemployed/self-employed/looking after kids/ill).

DH has a fairly decent work pension, which I still get if he dies, so I'm not totally sunk, but really want to get organised for a pension of my own now that I have a regular income.

I just don't know where to start - neither of my parents ever had private pensions, so they can't advise me, and when I Googled there was so much info that I got overwhelmed. I guess I kind of thought that Google would give me a few options and I'd pick one and apply online, but that doesn't seem to be an option!

I already have an ISA which has about 10k in it, and I can afford to put a few hundred each month into a pension, so although I know I won't be getting a fortune, I'm hoping to have at least a non-negligible pension coming in.

Currently I'm 44, happy to work to 70 as my job isn't all that physically demanding. I'm not bothered about getting a lump sum on retirement, but want a regular income.

So, where do I begin? Can I do it all online or is it best to go to a financial advisor? I'm fairly savvy with things like interest rates etc, so I'm happy to work out the best value etc once I know what I'm looking at - not a huge fan of financial advisors as we had a bad experience with our mortgage, where I saved us about 100k by doing my research instead of listening to the advisor, but if that's the best way to go then I will.

Are you employed??

I agree that pensions information in this country is a disaster. I’m from Australia where the info is so much easier! I’m quite well informed and I still find it very difficult to understand!

if you are in a job your best bet is to go with your employers pension fund - they have an obligation to put in some for you and might match increased contributions. Or you can elect to put more in even if they don’t. It’s easier doing it that way as then it can come iut of you pay and the tax is all sorted etc. The downside is that it might not be the best possible pension fund but honestly I think it’s the easiest option. And you’re unlikely to have the knowledge or skills to pick the best fund (I don’t and As said I’m relatively well informed!!)

My first port of call would be Pete Matthews Meaningful Money (podcast or YouTube) to get a bit of an understanding what you are doing.
I’d then just open an account with Pension Bee and put in as much as you can. I’m not sure that’s the best advice but at 44 the sooner you put money somewhere the better.

I probably know about as much as you but luckily have a fabulous workplace pension. However, this is what my husband (who didn’t have a pension at 41) did.

@Perple I'm self employed

@Guardup I saw Pension Bee, is it decent? Can I move all my money to a different pension if I don't like it further down the line?

In general, can I withdraw money from my pension before I retire if I need to? Eg say an unexpected repair is needed at home, could I just take some money out as if it was a savings account (albeit with a financial penalty maybe), or is my money locked in there until I retire?

Have a look at pension wise I think is the name of the site

@GettingOrganisedNow I’m slightly reluctant to advise you as I am absolutely no financial adviser however you can move pensions. People tend to consolidate smaller pensions into one pot though rather than move the around. I should think this is probably an expensive way of doing things so I would think it’s better to pay the money in and forget about it for 21 years and let it grow.
You certainly can’t draw any money out until you are at pensionable age. Then you are able to take 25% tax free.

I would highly recommend looking up Pete Matthews- he will be able to explain it much better than me and you can make a plan. I wouldn’t delay though. I read that you should start your pension saving at 50% of your age. For you that means 22% of you income for a decent pension pot. The sooner you start (even if it’s just 5%) the sooner it will grow and I promise you you will thank yourself in the future x

Thanks everyone, this is all really good information. I've been surprised at how hard it is to find stuff online - I guess I thought it was a bit like starting a mortgage or a savings account, where there are sites that tell you the basics and what to consider and then you just Google for options to apply for. But for pensions it's just really all over the place if you don't have a clue!

I think the poor information is an absolute disgrace - and inexplicable to me - you ts such an obvious ticking time bomb that just a bit of info could help to solve!

I agree @Perple, I'm generally quite good at figuring these things out, and I don't feel like it should be overly complicated, but it's just very confusing!

It is so confusing.

every year I get my annual statement from my Australian pension fund and almost cry with relief at it’s nice plain English paragraphs and easy to understand graphs!

I think vanguard have pensions - basically the way to think about it is it’s just like any other managed fund but in a tax wrapper like an isa - but with some more rules.

I've set up an account with Vanguard and drop in a couple of hundred a month, via standing order. It goes into tracker funds, as that's what I've chosen. Iirc, half into the FTSE 100 and half into a global one. That's not a particularly great split of funds tho. But I'm of the opinion that better something imperfect than nothing.

No, you can't get the money out if the boiler breaks. Once it's in, it's there until retirement. You do get tax relief on it tho.

@KarrotKake - how do you deal with the tax relief? Do you put it on your tax return and it gets accounted for that way? Or do you somehow out it in the find from before tax income?? Thanks

I'm self employed and have a Nest pension that I started, like you, in a panic at 44!

My employer (when I had one) could use it to add their contributions. It's all easy.

@Perple I'm a basic rate tax payer. It just gets added in automatically. So, my account looks something like: Funded: 150, Tax: 30 total: 180. Suspect if you were paying higher rates of tax, it needs a self assessment to deal with it.

You can't drawn down any state pensions until you are of pensionable age which is around 67 for me and I'm 45 so assuming it'll be the same for you.
This will be either be the £185 per week or less if you've not got full contributions.

If you have a private pension, from the age of 55 (this will rise to 57 by 2028) you can draw down all of it (only 25% will be tax free) or keep it all in there or just draw down the tax free bit.

You can either then leave it or draw down as you wish.
Most people leave enough in so that when you decide to retire and need an income, you can either take what is in the fund out and purchase an annuity or keep it in the fund and draw down a regular income from the fund (however, the fund value goes up and down so it's not a fixed income like an annuity, if it's certainty you're after).

Or you can leave it all in there until you're 65 or 70 and ready to draw it down.
55 is just the minimum age you can access it.

You can't access it before though if you have an emergency.
I'd keep your £10k in an ISA for that.

There is a limit of £40k per year that you can put into your pension fund.
After that any contributions are taxable.

Your pension contributions will be invested and the value of your fund can go up or down depending on the markets they are invested in.
My overall pension value has gone down in value this this year but with some pensions you can chose your risk levels which will likely be reflected in the movement of your fund value.

Don't rule out other types of investment like a rental property if you have a lump sum to lay down. I have both a pension and a rental property (as I have chosen to spread out my asset pool) and currently, I'm looking at a bigger return on the property than the pension fund.

Agree on spreading out assets. I have property as well as pension. Property is a pain in the neck and obviously much more hands on than my pension which requires zero effort - but ultimately I will get a better return on property

If you work, what is your company contribution? It may be better to have a workplace pension. I currently contribute 8% of my salary and they match it. So 16% going in.

Look into a SIPP - self invested pension plan. Most of the big companies will offer them eg Hargreaves, Fidelity, Vanguard. Compare them to see who has the lowest fees and whether they charge for things like paper statements if you want them. Most will have a minimum amount of investment or monthly contributions when you set them up. You can then choose from a range of investment types.

PensionBee is quite costly compared to some providers. Really look at fees as those eat in to your investment returns and while 0.1% may seem a small amount it can really mount up as your investment grows. There are providers of a simple SIPP (Self Invested Personal Pension) such as Vanguard Investor who have entered the market to give a low cost route in to investing. Percentage based providers like that are great for small amounts but when you get to £100k then shop around again as there can be lower cost options for larger amounts, such as Interactive Investor.

Pete's videos and podcast is great. Here is a video about using Pension compared to ISA for long term investing:

Op I'm also too late to pension.

I opened up a self invested personal pension, a sipp through Hargreaves and landsown, only because I liked their site, I need to move it really.

It's invested in some vanguard life strategy fund's, 100 equity,as you near retirement age the idea is to reduce the equity and go more for bonds.
I'm a fan of vanguard,and Jack Bogle. I have a few of their fund's,again I'm no expert!

But I have some in a sipp with the idea that would cover larger bulk costs eg a new car/boiler and use state pension and teeny works pension to live off.
I also have a stock's and shares ISA which is pension as well but also my back up money.
I then save bits and bobs into pb.
Opening a sipp is easy, buy something that covers a lot of sectors and classes etc so your not putting all your eggs in one basket. Black rock do similar to vanguard so you can compare fees and performance.

When DH moved jobs he opened up a sipp and moved his first work pension into it.
If he leaves his current job he will probably also move that pension into it.
He can then fully control it.

www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics

There is a government free advice service for pensions. Link above.

You can speak to a pensions advisor for free.

Look at Martin Lewis website and make an appointment with a financial adviser. Employers pension is good idea as they put money in too but I would recommend a private pension as well.

@mamalovebird
If it's not too nosey 😜 what do you do with the rental incomes you get? Do you invest it into stocks ?

Re finance advisor...be careful they will get money for certain products...

Look into sipps dh likes it as it's all in his own hand's

I purposely don't make a yearly profit by keeping the rent low enough so that any income is pretty much offset by costs. I normally break even. It generally gives me good long term tenants who appreciate a good rent and my mortgage gets paid.
Any loss making years go against my husband's tax code as he has his own company so does a self assessment and is the higher earner so we save more tax.

Me & DH are accidental landlords from the 2008 crash so have kept it simple. We both have careers not in property (although, I'm an accountant so can handle the tax side of things). I'll get my return when it's sold.