Pension - should I and how?

[Wanttotry2017]

Hello I'm 30. I work in a freelance industry and always have. I started saving when I was about 23 and now have considerable savings but was hoping to use this as a deposit for a flat but will still be some time before I can buy I suspect. I don't stand to inherit anything from my parents and not in a relationship.

I'm starting to wonder whether I should be thinking about a pension. I have no company scheme I could do and don't know much about pensions, what I should do or where I should start. And I also am wondering shouldn't any money I save be going into buying a flat?

Please could someone advise.

I know this sounds a bit trite, but I would look at house purchase first before thinking about pensions.

However, if you start off small, at least that gets the ball rolling.
The state pension requires around 30 years of NIC contributions, which is easier to get to than when it required 40+.

Look into a LISA for house saving as you will get 25% gov bonus to top up your savings. A LISA can also be used to save for retirement but personally I think pensions are better. LISAs have restrictions on how much you can save in, you can only pay into it until 50 and can only withdraw from 60. Pensions are more flexible imo.

State pension will give you a very basic standard of living in retirement so best not to rely on it. Personally, I would try to save, if only a small amount, into a personal now pension. You can access your pension benefits at 55 now, with 25% tax free. Saving small amounts now will give your pot time to grow. If you end up employed in the future you can transfer your pot into the workplace pension (which your employer will have to contribute into) and benefit from lower charges.

Thank you mint. What personal now pension would you recommend?

You may get pointers about providers on something like moneysavingexpert.

I have pensions with Standard Life and Scottish Widows, but couldn't really say whether they are good or not..

Definitely get a pension going along with your other savings. The sooner you start the better. The bulk of what you'll end up with comes from the earliest investments.

NEST Pensions accept the self-employed. Many pension companies will do personal pension schemes and there is also the option of a SIPP (self invested personal pension).

Do lots of research. You can often read performance reports on pension providers website. Problem though, no one has a crystal ball to predict the future, so past performance is not an indicator of future performance, it just gives hope that the pension is managed reasonably well.

What can you afford to put in? As you don't have property yet I would look at putting around 15% of gross income towards retirement and continue putting money in to your house fund.

Of course as you say you have lots in savings, I assume you have no debt. If you do have debt, pay that off today as interest rates on savings are terribly low and interest rates on debt is terribly high!

Long term having your own property is generally a good investment but you don't want all your eggs in one basket, so you want property, pension and some cash savings (for covering any unexpected expenses).

The state pension requires around 30 years of NIC contributions

No it doesn't, it requires 35.

15% of earnings (gross as that's how they end up in a pension), from the age of 25, was the recent outcome of pensions research. It looked at the level required for a reasonable pension. Woman's hour also featured this in an article this week.

Nannynick is right to say you need more than just a property. If that your only asset retirement will be pretty grim. You could rent out a room, but you can't sell the kitchen if you need cash.

A stakeholder pension would be suitable for you. They have low charges and a small minimum amount you can put in each month. The maximum allowed is £3600 per annum. I started oen for my children in their early teens with Standard Life and it’s performing well. But there are lots of other providers as well.

stakeholder pensions are out of date and very high charging compared to post RDR pensions - post 2013

See an IFA and get some qualified advice.