Should I start a Pension?

[TheWrathofNaan]

I am early forties and have no pension.

I have a child with Autism which means I haven't worked for a long time and am unlikely to for some time as his needs are great.

I have got savings and wonder if I should be putting this money into a pension instead?

Watching with interest. I'm in late 40's here, same financial position (without the savings). Worry greatly about old age.

Oh me too, marking place Hope thats ok.

Yes. Yes and yes.

State pensions can't be relied on now.

If you want any kind of dignity in retirement then I'd say yes.

Employers can match your contribution; it has tax benefits etc.

If you speak to an independent financial advisor they'll help.

Good luck!

No. They keep changing the rules and once your money is in you cannot easily get it out. Annuities pay bad rates and unless you have hundreds of thousands saved the pension will be pathetic any way.

wow- really conflicting opinions !

The thing is, ppl who really know about it this aren't meant to give professional advice without knowing your circumstances.

Greengrows is a little out of date, the last budget made it easier to get money out without the annuity thing.

However, the main benefit of paying into a pension scheme as such is that the contributions are tax deductible against your employment. Now, you are not employed, are you? So you won't get any of that. The real question is, therefore, how should you best invest your money to provide for an income in old age and/or your DSs security.

This is not simple because you do need him to be financially separate from you, otherwise his adult benefits will be reduced. On the other hand you don't want him at risk.

Paying into a pension scheme as such, might not be great value for money in your case, because you will suffer the management charges but not get the tax deductions as you are not employed.

I think you would be well advised to find an investment vehicle that fits your likely future needs. For you it might be property to let out, or it might be equities. I think you should spend a few hundred quid on getting some professional advice.

In cases where people are working, and the employer will make a contribution, and you get your contributions tax free, I encourage people to join if they possible can afford it.

In your case, I think the lack of tax breaks and employers contribution make it much less clear cut.
If you possible can save some money, I would. Depending on the amount would affects where you could put it.
Couple of Hundred a year, cash ISA or savings account that gives 5% interest for the year if you fund with at least X/month.
Couple of 1000/year. Cash or equities ISA????
More than that.... You definitely need to see someone.

I have no experience other than persuading new starters at work that turning down the (at the time) final salary pension was bonkers.

Um... okay.....

Alice, do you want to share slightly more so we can point you in the right direction, if we can? Are you earning? Are you expecting todo paid work in the next few years?

No to pension unless you can afford to put £200 + in a month. Just save.

No, I'm not earning. Mum to 2 small children, one of whom is disabled, so I am his carer. Don't anticipate I will (unfortunately) be able to work in the next few years. When I put that confused face on, it was after just the 2 messages - one saying no and one saying yes. It kind of made it sound like "what's the point - you're fucked anyway..." which they probably weren't saying... but this is all such a minefield for so many people - I really have heard lots of conflicting opinions on it.

I used to work in pensions. I would go and see an IFA. My opinion is yes you should, especially now Osborne has changed the rules and you won't have to take an annuity.

I have three DC, two disabled. I am a few years ahead of you. DS2 is my most disabled, he needs an adult around at all times. But he is 18 now, he goes to school and I have been back at work for a while. So I wouldn't give up. What I would do, is plan.

If we start by saying you have about 20 years until retirement, that is a fair time. I would start with the basics, is there any chance you can own your own home by then? And within the next 5- 10 years, can y move to a set up where your child is in school for enough of the day that you could earn? I know a lot of mothers with adult disabled DC who have settled into the caring role because they found it too difficult to work early on. But sometimes it eases up a bit, but by then you are set in a pattern and you don't notice. For me, the right thing has been to work as well as care.

If so, in your shoes I would use these next five years to retrain if I needed to, so that once your Dc is stable enough, you are able to earn fairly good money for say 15 years. That could put you in a very different position, even if all you do is buy your own home, pay off all your debts and get an allotment.

Scarily I agree with Greengrow, but for very different reasons.

If you possibly can, save as much as you can for your old age as you have no idea what shit will happen.

Bear in mind I do not mention the "retirement" word
its a concept that will be as outdated in 30 years as it was unimaginable 130 years ago
Pensions were a short term idea that has been and gone.

Savings : ISAs every year - especially with the £15,000 allowance per person per year .... no tax break going in, but no tax charge coming out AND you are in control in the interim

Property : think when to sell any houses to provide later life income

Keep working : Your child will be comparatively self sufficient within 15 years, so you'll be able to work later in life - social life with benefits

Odd investments : I'm looking at woodland that will become my own private family campsite , or grazing land for horses or many other oddities

in short : "pension funds" are an utter rip off
think laterally about living later in life and enjoy

I would say pension funds offer a massive break if you are employed and you get money off your tax and NI bill and your employer makes contributions.

If you are not employed, then it is dubious that pension funds do a better job than anyone else does of managing your money, and they charge the earth and are inflexible.

Also the draw down - say you have £200k in the pension and draw it out. Most of that under the new rules once they change mean most of that will be taxed at 45% so you will be handing about half of what you saved to the tax man. If instead you have only say £5k in the pension and no other income okay you willd raw it out as a lump sum tax free but that is hardly worth saving anyway as the sum is so low.

Go and see a qualified financial advisor. There's pros and cons to ISAs and pensions.

mome is right that it is worth a small amount of money to get proper advice. W can't really advise you responsibly as we don't know enough about your circumstances. For instance, if you have a private income, then the picture is different again. All I can really do is encourage you to believe that it is possible, and to take control by planning ahead.

Knowledge is power, Alice, so go take some professional advice meant just for you.

Thankyou everyone. I have given the impression my son is much younger than he is, he is a teen.

The savings are going to work against me with the change to universal credit and that is one of the reasons I was wondering whether I should put the money in a pension?

I have no idea. But he will only be a teen for a bit. Once he is 18 our savings will not be relevant. Don't let the tail wag the dog- invest as a strategy that makes sense rather than to deal with universal credit.

Seriously, you should spend a tiny bit of money getting some good quality personalised financial advice, update your will, think about a trust, sort out your investment strategy. This is too important to be done by mumsnet, lovely though we all are

The fact that everyone has a different opinion, and very different reasons for giving the same answers just shows what a minefield it all is, and how your individual circumstances can affect the outcome. It is an incredibly personal decision to make, hence many of the comments saying speak to someone who will have all the facts regarding your income etc to make an informed decision.

Thanks for the info. I will look into it further.

If you don't earn much and money is tight I don't think pension contributions are worth it. Plenty of people get less than they paid in. Companies go under - Maxwell pension scam, Equitable life, The Government changes the rules - ACT changes, Gordon Brown pension fund raid, rules change - caps on the most you can have in there after you've contributed and the like.

Also for those not well off at all and with no employer contribution if you have a small pension that might simply mean instead of getting pension credit and housing benefit when you're 67 you will not get those - in other words you can be penalised by the way state benefits work for having saved into a very small pension if you are on a low income. By all means save but perhaps just put it in an instant access account.

I think people can get less than they put in with all investments. They can go up and down. I think some of the advice on here is now out of date with pension simplification and now further changes by Osborne. Go and see a qualified financial adviser who will look at all your circumstances and give you the best advice. If they're good they will answer you honestly on what's right for you. I know my pensions director would have, he'd have said if he thought a pension wasn't right for you.