Pension

[LunarRose]

Can anyone talk to me about pensions?

I'm lone parent to two young children, one of whom has SN. I'm 29 years old and have no pension currently. a career isn't really an option at the moment because I don't know how long I will need to be caring for DS.

So I figure I need a private pension scheme, ideally one that is a bit flexible, that I can put a bit more money into when I can and less when I can't (if that makes sense). I think I could manage a minimum £50 pounds a month but sometimes I might will be able to put aside up to £200.

But I am utterly clueless and have no idea where to start can anyone help??

Rather than just thinking 'pension', broaden the task to 'providing for my old age' because there are a few options and you might decide to spread the risk rather than putting all your eggs in one basket.

Pensions... The most common kind are the portable 'stakeholder money purchase' type. These are the sort where you (or your employer or a combination of the two) put in an amount each month which is invested by your pension company and builds over time into a fund. Fees apply. You can contribute a lot or a little, depending on your circumstances. If you get a job or change job your employer can contribute and you can take your pension with you when you leave. When you retire you can opt to take the fund either as a lump sum or it will buy an annuity to give you a regular income or a combination of the two. The big advantage of pension funds is that contributions attract tax relief. The main disadvantage is that your money is locked away until retirement. Plus, as they are mostly invested on the stock market, their performance varies.

Savings and Investments... If you don't want to lock your money away until you're in your sixties, if you want something very 'safe', and if you want to be more in charge of what happens to your money you can set up all kinds of regular savings or investment plans. Cash ISAs are popular as they don't attract tax and are quite flexible. There are investment trusts, unit trusts, stocks and shares ISAs and other managed funds... invested in stocks rather like a pension but no tax-relief. There are long-term bonds which are good for lump sums and often attract a good rate of interest.

Property... Property values may be a little squeezed at the moment but people approaching retirement today who took the plunge buying a house 30 or 40 years earlier are finding that their modest bungalow has outperformed all their savings and pensions combined!!!

And there are others, of course. Hope that helps you get started.

The above advice sounds correct. However, one thing that you may wish to consider is that if you ever needed to claim means tested benefits (such as Income based JSA or Housing Benefit) investments in an ISA or property would be taken into account and if they were worth more than £16000 then you wouldn't be eligible for any means tested benefit.

I believe where your money is locked in a pension, this would not be assessed as you would be unable to benefit from it until your retirement date.

Thank you for the replies

Ahh that was another big question, if I squirrel a little money away now does it affect income support?

I can confirm that pension money is not included in calculations, but ISA's most certainly are (once above a certain level),