Too old for a pension?

[pensionnightmare]

Firstly, no judgement please. My life hasn't panned out the way I planned in my younger days.

In my 20's, full time employment with a decent employer who had a non contributory pension - approx 5 years worth.

Then had a two year break with an employer who didn't have a pension - this was before it was made a legal requirement.

Late 20's, early 30's - back with a large employer and a pension - approx 5 years worth with me contributing and the company.

Those two pensions are sill there - both frozen as such but will give me something on top of the normal state pension. First one doesn't' have a value as such, will just give me roughly £30 a month, second one there's about £25k in there.

Then had a career break - then got pregnant. DH at the time earned minimum wage and we were on tax credits for ages. Could barely afford to live, definitely couldn't afford to put money aside into a pension.

Fast forward to now. I'm 45 and finally earning money - not a great deal but probably enough to put say £200 a month aside into a pension.

However, I'm being told that's pointless at my age and if I can't afford to put at least £600+ into a pension, I'm wasting my time and money.

I'm starting to massively panic to be honest. My 20's and 30's have just zoomed past and because I wasn't in a 'normal' job whilst pregnant and subsequently bringing up babies/toddlers, I haven't kept up that pension part.

I have full state pension according to my online record - as in, I can't get anymore, I have the full allocation.

What should I do? Start adding £200 a month to one of my existing pensions, or just start saving? £200 a month for 20 years is only £48k . I will be mortgage free when retired I might add and DH has a regular work pension (nothing amazing but just a Standard one where you pay in and your employer does too)

Why are pensions so bloody complicated?!

What is lifestyling please?
I am
Super interested in this as 45 and also very little pension and self employed

Lifestyling is where your pension fund gradually transfers your investments into bonds and cash as you get nearer to the age you may draw them.

The "benefit" of this is supposedly to preserve the funds so you don't find there's been a dip just before you need to start drawdown. The disadvantage is that they start doing this from age 55 and you could need that money for another forty years so you actually want it to keep growing.

It's a throwback to when people just used all the money to buy an annuity, now we can drawdown in whatever chunks we like (tax permitting of course) it's no longer relevant.

Only managed pensions do this, SIPPS don't because with those you choose the investment.

whoever told you that saving £200 a month into a pension wasn't worth it - they are an idiot! What did this genius advise you do with this money instead of a pension?

I’m a Chartered IFA and that adviser was talking utter bollocks.

Save what you can, use a global tracker fund, Vanguard Lifestrategy 80% is good. Move all your pensions into it as it’s low charges. Ignore.

You’ve misread you State Pension as you can’t have accrued 35 years. You may well be up to date but will need to keep paying NI.

This is what I'd suggest too.

As others have said you will get tax relief so for every 80 or 60 (depending on tax bracket) £100 will accrue in your pension.

I started mine at 35 and its very healthy now (however my situation is a bit diff as am now a high earner) i did prioritise my pension though and kept outgoings low and made adhoc extra payment into my pension as and when i cpuld (eg payrises and unexpected bonuses)

Honestly these people that say it's not worth it. They need shaking. I moved jobs 6 years ago. I've already got a pension within this last 6 years of £450 a month and a 15k lump sum. Yes I need my other pensions to live off but 20 years of pension contributions is certainly worth it!

Did your adviser do cashflow modelling, showing you what £200 per month into a pension could become in 15-20 years?

Have a play with www.guiide.co.uk/
Sure putting in £600 a month is better than £200 but £200 a month for 15+ years will give a pot of money, which may be £80k ish, which is better than nothing.

Self employed sole trader or Ltd company? If the latter then talk to your accountant about how the company can pay into pension tax efficiently.

There's a difference between saying you really need £600 a month to have a decent pension pot and saying that it's not worth putting £200 a month in.

I find it hard to believe a financial advisor told you not to bother. Totally believable that they set expectations that you've left it too late to built up the pension that you might want.

Money helper looks like a good site to work out how much you'll have. But £200 a month is a great start.

If you are self employed will you have a definite retirement date or is it the kind of work where you can slowly reduce working as you get older but still be making an income? I come from farming stock and farmers never seem to fully retire and I think it's quite healthy to not have a hard stop to working but gradually transition to doing less.

However, I'm being told that's pointless at my age and if I can't afford to put at least £600+ into a pension, I'm wasting my time and money

I hope you didn't pay the idiot of an IFA who gave you that little nugget of nonsense. £200 pm into a pension will attract tax relief and investment growth and, while it's not ideal, it's way better than nothing and you might be able to increase the amount in time.

I firmly believe that, until you've gone past your ISA allowances and have contributed a large amount to a pension, plus built a five figure emergency fund, and paid off all debt including mortgage, that there is little to gain from talking to an IFA that you can't work out yourself with a bit of reading and something like listening to the Meaningful Money podcast. Because that's all an IFA will tell you to do and charge you for doing so.

@pensionnightmare

You can contact the pension administrator and ask for an illustration based on a presumed retirement date.

That should give you an idea and a projection for,the final salary part at least.

The maths doesn't seem right here.

For a £15k lump sum (you can usually take 25% tax free) the pot would be £60k. On a 4% drawdown from the £45k you'd have left after taking the lump sum, you'd have £1,800 a year, so not £450 a month.

To have £450 a month after taking out £15k you'd need a pot of around £165k, which if built up over six years means having put in £27,500 per year which is obviously not impossible but a long way from what the OP is able to do (plus your tax free lump sum would be more than the £15k of course).

You financial adviser was terrible, and I think you've misread your state pension record (a lot of people do - the way they present the information is a bit confusing).

However, it's likely that you only need a few more years for full state pension and you have more than enough time to make that up.

As for the private pension, putting in 200 a month gets tax relief, so is actually 250 a month (assuming you're not a higher rate taxpayer). That's 3,000 a year - or £60,000 over 20 years. And it will grow with compound interest, which could easily add another £30k or more over that time period.

Keep the defined benefit pension where it is, combine the remaining small bits of pension into 1 place so it's easy to keep track of, and start paying in. The sooner the better.

OP I know you say self-employed = no top up but isn’t tax relief a sort of top up of free money? Your provider should automatically apply that to your contributions, taking every £80 to £100?

Or maybe you have to claim the tax relief yourself via your self-assessment tax return if you’re on a higher rate of income tax.

However, I'm being told that's pointless at my age and if I can't afford to put at least £600+ into a pension, I'm wasting my time and money

If that was a financial adviser then it might be you've just got hold of the wrong IFA for your particular financial circumstances or more prosaically, the amount you can afford isn't worth their time in terms of fees.

As people have said, at 49 no money paid into a pension is wasted and you get tax relief as well.

I didn’t start till after age 50, I had a teeny lgps pension of £8k that I transferred into a Sipp, I pay £2880 a year, which is all I’m allowed as I don’t work - it gets tax relief of £720 so there is £3600 a year going in.
Mine’s over £20k now and will be more like £50k by age 65.

I started at 49
£300 pm it should be worth a fair bit by the time I'm retired!
I'm also self employed and have a private pension with nest. All tax relief is added automatically.

I didn't start a pension until I was 46 (nhs), not able to before as finances too stretched keeping a roof over our heads and enough food in my kids! Took this pension now, in my 60s, and its allowed me to just work couple of days a week until state pension due. It's enough for my lifestyle but I suppose it depends what you want out of retirement, I'm quite happy with bills paid and do not have expensive tastes (apart from my wine bill 😂).

Honestly, I would seek the opinion of an ifa. (Make sure they're independent and not tied to a bank etc )I work with some so if you want to drop me a PM you're welcome

This is all simply amazing information thank you. I'm spending the first day next week when the kids go back to school reading all of this property and getting onto it.

However, I've managed to find out my first pension - actually better than I thought - see image.

Second one isn't as great as I thought, this is with Scottish Widows - only £17,900.

So the question is,

The second one, do I just add to that? Or am I much better setting up a new SIPP one and moving it across? What's a DC pension? I haven't paid into that one for a while, it's just been sat there while I've been wasting time.

Someone else mentioned this..

https://www.vanguardinvestor.co.uk/investments/vanguard-lifestrategy-80-equity-fund-accumulation-shares/overview

Would that be in addition to a SIPP?

And yes, the financial advisor seriously did tell me this. Granted I had baby brain at the time, but he left me feeling there was literally no point saving into a pension unless I had £600 a month to whack in there, hence why I've ended up doing nothing. Doesn't help that I've had my parents telling me it's fine you'll get the state pension (as though that's going to be enough by the time we get there!)

They should teach all this at school. Useful stuff. I feel like i'm learning a new language right now, googling terms and trying to get my head round what it all means.

How would I find a decent financial advisor who could explain things in basic English like you guys do on here?!

Check out the fees you pay on your Scottish widows and also if it’s fully flexible for drawdown etc.
Our Sipps are with Hargreaves Lansdown and fees are 0.35% + fund charges. I use low cost trackers costing from 0.10-0.20%

Ignore projections, they are meaningless in real life.
Decide how much you’d like at retirement and use Guiide, it will tell you how much you need to save at various growth rates.

I am 47 and have worked since I was 16 so 31 years in total but I already have the max state pension. I presume it is because I paid into SERPS before the second state pension was stopped so I paid additional NI for some of my contributing years.