No pension, no plan.

[kitkatcrunch]

I've been a SAHM mum, worked part-time, and I'm now self-employed. Post-lockdowns, I've been in a right mess financially, and whilst I'm keeping afloat, I'm not able to save anything really, but I'm trying to sort out my finances.

I don't have a pension, apart from one I paid into from a job pre-kids, which will net me about 50pence.

Can anyone point me in the direction of suggestions how to start preparing for the future on self-employed low income?

Are you married?

[quote Mia85]@EvilPea there are definitely some providers that will have low fees and minimum payments. E.g. for a Fidelity SIPP the minimum is £25 a month help.fidelity.co.uk/site/dealing-and-managing-cash/minimums-to-open-a-pension and the service fee is only 0.35% if you have a regular plan set up. Of course that's not going to set you up for a comfortable retirement by itself but getting started and comfortable with how it works is an important first step.

I don't think they or Vanguard offer LISAs though,[/quote]
That is amazing. Thank you. I googled and googled but couldn’t find a small amount paying one.
I’ve set it up.

I’m not eligible for a LISA as I bought a house with my financially abusive ex (hence why I’m in the shit now) so a lot of that stuff I’m not eligible for. I’m also still paying off his debt in a plan, so savings,as such I shouldn’t have. I’m hoping I can include a pension without issue.

@kitkatcrunch

Thank you, honestly. I thought I was going to get slated for being daft and having my head in the sand for so long. *@EvilPea* honestly, it's fine. Hijack away if it helps.

Thank you for starting this. I’ve just opened a pension. Admittedly it’s going to be worth bugger all. But it’s a start.

@EvilPea - as far as I know you can still have a LISA if you've already bought a home, you just wouldn't be able to use it towards a home but it would be fine used as a pension to claim when you're older.

It might be an unpopular opinion, I'm not sure, but I've postponed all thoughts of a pension (besides paying NI for state pension) as I'm nearly 40, on a low income too, and am thinking it's more important to get myself debt free and get a mortgage free house (only just got on the property ladder) as then if I've got a roof over my head I'll need less pension in the first place. I know there's help for housing costs on a low income but that's already getting tighter.

@Drivingish

It might be an unpopular opinion, I'm not sure, but I've postponed all thoughts of a pension (besides paying NI for state pension) as I'm nearly 40, on a low income too, and am thinking it's more important to get myself debt free and get a mortgage free house (only just got on the property ladder) as then if I've got a roof over my head I'll need less pension in the first place. I know there's help for housing costs on a low income but that's already getting tighter.

This is something that has been at the back of my mind as well.

I’m not getting back on the housing ladder, end of story, it’s beyond depressing. But it is what it is. I will need to rent using housing benefit when I can’t work anymore - the government were hugely short sighted bailing out the housing market in 2008. When generation rent can’t work anymore, the housing bill will be massive, plus there won’t be homes to use to bolster care home fees. Yet the buy to let landlords with multiple properties will have been able to pay for financial advice to protect their assets from care home fees. So all in all the government will be massive losers.

Anyway! I digress!!! So I’m unable to work anymore, renting privately, using housing benefit, there’s little point scrimping and saving to put myself over the 16k saving threshold. In my head there’s got to be a better use to that.

[quote Drivingish]@EvilPea - as far as I know you can still have a LISA if you've already bought a home, you just wouldn't be able to use it towards a home but it would be fine used as a pension to claim when you're older.[/quote]
That’s interesting, when I looked at it. I just saw the “only first time buyers” bit, and I didn’t actually read any further.

Remember you get tax back on pension contributions. You don’t get that from mortgage payments. You get 20% uplift on all oension contribtions if you’re a basic rate tax payer.

It is likely your employer pays pension contributions too. If you’re not in the oension you’re turning down free money or what is part of your salary package.

Pensions need time to grow. The sooner you pay in the better.

Paying your mortgage AND paying into pensions is the best way, rather than trying to clear your mortgage and having no pension provision.

And yes, it’s very hard, especially if you’re low paid, have debts and your employer contributes little.

Good advice for anyone considering job, is to consider the public sector as they have excellent pensions still. Someone working for local government for example, who earns about £25k can accrue about £500 of defined benefit pension per year. That will be worth £5k of yearly pension within 10 years. To get £5k of guaranteed pension out of a pension pot, if you buy an annuity giving you inflation linked guaranteed oension, would require a pension pot of £150-180k.

To the OP, well done for starting. Anything you add now will grow.

And for those without pension provision, even though it’s boring, it’s so worth making sacrifices now to pay into the pension. Giving up some little luxuries will reap rewards. No-one wants to be in old age poverty.

As a self employed person you can set up an easy pension with nest
You can put in as much as you earn (profits) -20%
And they collect the 20% direct from the government and add it to your pot

Or you don't have to add anything if you haven't earned much that year.. you get 3 years to back date.. if you earn more in another tax year

It's really easy

I do a basic direct debit every month and when I know how much I've early for the tax year I too it up.

Really wish I'd set it up sooner!

@EvilPea - that's true though, all these savings schemes chucked at generation rent miss the obvious point that it will all get swallowed up again later. We moved to literally one of the cheapest areas of the country so we could buy but it's depressing to see how hard it's getting if you don't already have a 300k house paid off and a bulging pension.

I keep wondering though about the fixation by DWP on 'bank' savings when you're allowed to spend what you like. If you ended up with 0 in the bank but happened to have collected 16k in say rare stamps or art (well insured and hidden away in a fireproof box!) there seems to be nothing to stop you.

You can open a LISA with £1 and then put in as much or as little as you like, there is a government top up bonus that gets paid in automatically (25%) of anything you pay in and you can pay up to £4000 per tax year. It can either be used as a house deposit if you are a first time buyer, or leave it in until you are 60, you can take it out before that if you needed to but there is a penalty and you wouldn't get the bonus amount. You have to open it before 40 years old, I have one and I just put bits and bobs in as and when I can. I looked it up on the Martin Lewis website www.moneysavingexpert.com

There is also this if you qualify for it -www.gov.uk/get-help-savings-low-income

It is likely your employer pays pension contributions too. If you’re not in the oension you’re turning down free money or what is part of your salary package
I’ve repeatedly asked work and just got “yeah yeah yeah” but it’s never happened

It's not too late to start paying into a pension. The state pension is also relatively generous and if you've missed years you can pay voluntary contributions which is always worth doing. Do you own a property? Owning something small and well insulated could be a good target if it's possible for you.

The family pot should be topping up your pension to make up for the SAHM years

Thanks all, I'm reading with interest!

@EvilPea good on you for getting the ball rolling. I'm going to do the same today!

@ponkydonkey that sounds ideal, thank you.

to answer an above question - I am married, and my partner has a pension from their job, but it's certainly not going to do for us both. Plus, you never know what the future holds, so I just want to know I'm doing what I can to secure myself.

@EvilPea so pleased it was helpful!

Look into Nest. It's really good, government backed and ethical.

@Startofschool

Most important is to check your state pension entitlement - www.tax.service.gov.uk/check-your-state-pension

You need 30 years of national insurance contributions to qualify in full (you'll have built up some already). This is far more important than any private or workplace pension and you should have plenty of time to top up contributions if you haven't got enough.

If you're self-employed, pensionbee.com is good (nothing to flog here - I'm a financial journalist). Alternatively, nutmeg.com is pretty cheap and easy. Contribute what you can. Anything is better than nothing and it will really mount up over time - compound interest is magic.

Don't panic or be paralysed into indecision. Ignore the scary numbers. Just do something as soon as you can and you'll feel a million times better.

Good luck!

I thought it was 35;years now? Didn’t it go up a few years ago?

You mentioned a work pension from pre kids. Track that down and see what it's worth. I paid £50 a month into a work pension for 4-5 years over 20 years ago. I tracked it down recently thinking it would be worth about 5k. Turns out that it's now worthy £107k! You might have a pleasant surprise

Actually, separate from making personal pension contributions now, I’d do these things as a higher priority:

1. Make sure that whilst self employed, you’re paying enough NI to secure your state pension qualifying years (your children’s age has an impact too - is the CB in your name?)

1. Seriously review this self employed low income. If it’s low income - why are you self employed? Why are you not seeking employment with a company that will contribute to a pension? If it’s local government or civil service, even better.

If this self employment is your dream, that counts for something. If it’s going to grow big, fantastic! But if it’s because it fits around children… seriously take a look at that, and why it’s your earnings and future pension taking the hit. Flexible working with your husband and you, share childcare, and ditch the low self employed earnings.

On the subject of not knowing what the future holds, a PP mentioned savings and benefits. The money in a pension pot is not taken into account as savings until you reach state retirement age. You are able to access the money in your pension pot at (I think) 57. Your pension contributions are not taken into account as income for benefits either should the worst happen.

Just a word to the wise, I worked in Ireland before I came to live in the UK, only came for a year, fell in love, thirty four years later....

Anyhoo I digress.

I had two years of contributions in Ireland which will count towards my contributions record here, worth checking if that applies to anyone.

In a slightly similar situation a few years ago I checked my state pension forecast. I opened a vanguard SIPP and transferred my old work pension into it. I add to that monthly. Opened an investment LISA and pay small amounts into that when I can. Then finally got a job with a local government pension scheme.