DH needs to start a pension

[Cicadasounds]

Self employed hand to mouth. Not financially literate. Either of us. He Is now saying that the global stock market is going to crash due to Trump so he doesn’t feel comfortable investing in a pension. I need him to focus on not having any pension provision. I have no idea what the stock market will do. We have DC to think about. Is there a calm, accessible online course he can do?

Totally agree.

Vanguard are generally considered to have the lowest charges, and their Life Strategy funds are perfect for people who just want to invest without worrying about the nitty-gritty of managing a ‘portfolio’.

The funds’ weighting of equity vs bonds changes as one gets older, I.e. more risk and potentially higher returns when one is younger and less the closer one gets to retirement.

NB: compound interest calculators can be a real eye opener…

I suggest watching the Martin Lewis money show episode from last week which was all about investing and pensions. He had some compelling charts on returns from investing vs cash.

Key thing is to invest money you won’t need for at least 5 years. The market has peaks and troughs. You still own the same number of units during the troughs, even though the value changes, but you can buy more units at a low cost to then hopefully see a gain in value when the market climbs.

As an example, my basic S&S ISA was showing a small loss during Trump’s tariff announcements earlier this year but is now showing a decent return on my investment. If it was a pension instead of an ISA, my tax would have been reclaimed and added to my contribution and then I’d have got the return on top, so would be pretty happy with that!

If you share family money it maybe more cost effective for you to up your pension contributions rather than start a new scheme for him.

There is always a crash coming. Historicly it generally takes around a year to recover from a crash and then the market continues to grow larger than it was pre crash. Google to see the graphs of world trackers over the past hundred years, see for yourself. Find the dip that happened because of covid for example, see how it went back up again.

He has 10 to 15 years before he retires, that's a good amount of time to ride out the bumps in the market.

You say he's hand to mouth? How much can he afford to put in a pension monthly? Is he aware of pensions tax relief? If he puts in £80, the gov puts in £20

Use a compound interest calculator online and plug in some numbers. For example:
If he puts in £240 a month for 15 years and the gov puts in £60, that's a total of £300 monthly, if it grows at 8% (rough historic average of global/US tracker) he could have a pot of £100k on retirement which is (sadly) above the national average, and goes to show there are a lot of people in his position.
Of course he could invest in funds which are less volatile than a world tracker, he could put a percentage of his pension in 'safer' funds such as bonds, but then there's less potential for growth.

Doing something is better than doing nothing.

You asked for an online course - Rebel finance school on YouTube is always recommended on here to help with financial literacy. It's a bit exuberant in tone, you'd asked for something calm, so I don't know if it will suit, but the information is solid.

Rebel Finance School, free on YT and FB.

Yes I’m sorry to say OP but he has no spare money and doesn’t get employers contributions

is there actually much point? He’s only got 15 years. I wouldn’t ever discourage people from retirement planning but I am not sure what you’re expecting from his situation.

Will stockmarkets crash? Some people think yes, some no. I don't think it's an EXTREME viewpoint, but at the same time it's a viewpoint and views can be right or wrong. Usually when investing in the stockmarket the best plan is to drip feed a bit at a time, and only do it if you're expecting to invest for 5-10 years or more, that way even if the market does go down it will likely come back up again before you need the money.

But in a pension you can choose what to invest in. It doesn't HAVE to be the stockmarket.

With people like your dh, they are more influenced by emotions than knowledge.

Do "what if" conversations with him.

What if he had an accident at work and became disabled? Would he still be able to do his job? What if his business failed?

What if the stock market doesn't crash and he misses out on all that interest and tax relief?

Does he intend to work until he dies? Does he have the kind of job where he can do that (ie not too physical)?

I had friends, a couple, very high earning (lots more than me and dh), who said they would never buy property but rent forever because "what if London property prices crash".

Dh and I bought a small flat, mostly mortgage, in a rapidly-gentrifying part of London (ie cheap) and it gained lots of value in just 5y. And my friends' attitude quickly turned into "what if we're missing out on all this passive capital gain" and they quickly bought a flat too.

You need to switch on that idea in your dh. "What if I'm seriously missing out on free money" rather than "what if there's a crash"

He can put it in a money market fund in a pension, so not the stock market. But it needs to be a pension not an ISA so he can claim back the income tax on it

As pointed out, he doesn't seem to have much disposable money ( "hand to mouth") and at his age if he were to start putting money into a SIPP he should be putting in huge amounts.

Instead of informing him about online courses, I would be having a conversation about the life he wants when he's a pensioner, and the life he wants for you both as a couple, and how to achieve this. Might be downsizing, overpaying the mortgage, could be a SIPP if he can improve his income (hard when he's paying off a loan - maybe he could get a second job?). Time is obviously a huge factor here.

Open Learn do some free financial education courses. There's one called Retirement planning made easy which takes 4 hours so may be worth a look.

Have you considered increasing your own contributions?

I know that doesn’t sort a pension for him, but would at least mean that as a couple you had more in old age.

I also agree with pp who have said that the first priority is to check that you are both fully paid up with state pension.

Also, if DH is really reluctant about the pension would he overpay mortgage payments instead? Getting mortgage free will make a huge difference to retirement too….

The term market crash can sound very scary. There are market crashes and corrections fairly often. Will there be a market crash/correction in the future? Almost certainly yes, when will it be? No one can tell you that. How long will it last? No one can tell you that either.

What we do know is what has happened in the past and what has always happened is that the market recovers to its previous level and then reaches a new all time high. It isn't linear, you need to be invested that suits your risk tolerance and timeframe.

Many people see market crashes as a sale opportunity to get stocks at a discount.

I think you need to be really clear with your partner what the issue really is. Is it a misunderstanding and a fear of investing OR is it an issue with being able to contribute what you feel is required?

You need to look at your finances in their entirety, not just pension.

Do you have any debt - get that paid off first.
Do you have any debt emergency fund? Aim for 3-6 months of your frills outgoings.
Top up anything needed to qualify for state pension.
Use up your tax free savings allowance-currently £20k each per annum.
Years til retirement is not your timeframe…it’s the years until you expire.

Rebel finance school on youtube. Do it together. Its free. Not allied to any business or anything. Watch together at 1.5 x speed and do it week by week. Theres a great facebook group to support too.

What amounts are we talking about?

Whatever he pays into a pension, he gets 20% gross added in tax relief, so £1000 becomes £1250.

He could simply put the cash into a short term money market fund and get the inter-bank rate of interest but that will not keep up with inflation over a decade.

Once he’s got a lump built up, he could buy Index linked Gilts which WILL keep up with inflation as they are uplifted at maturity, if he does that every year, he will have a ladder paying out yearly that can either be drawn or reinvested.
I’ve just set one up in my Sipp for 2035-40.
It cost me £12k for what will pay out £3k + inflation for 5 years. So it will always be worth £3k a year in today’s money.
You can use the streamlit gilt calculator to play around with and get more understanding .
That’s pretty much the safest form of investing as you are lending money to HM Govt and it is guaranteed to be paid.

Surely if he thinks the stock market is about to crash then that would be perfect time to start investing as he can buy at the bottom?

How would he know what to invest in though?

A Global index tracker is the most sensible ( for long term growth currently) but all or none of the following could happen:

The US could flatline for a decade, it’s happened before and it would be a huge drag on global performance, even if RoW takes on the heavy lifting.

OR, it could be a sharp correction followed by spectacular growth again.

A Bonds heavy or Balanced mixed asset fund might suit but again, might not keep up with high inflation.

Investing needs to take personal circumstances into account, when the pension will be drawn, what form it will take ( annuity or drawdown) likely timeframes, etc.

Saving in a pension is free money, whatever you put in is topped up by 25% by the government.

Have a look at some of the places that offer plans and see what they sound like

Link to one company, I don't have a pension with them but the information seems really clear about what you pay and tax relief.

www.legalandgeneral.com/retirement/pensions/personal-pension/

I’m so grateful for everyone’s posts. And you’re all right about the need to me to learn more in this area- have been distracted for years dealing with DC additional needs and health stuff but will have to make time.
There will be some surplus DH money to put in at some point for pension hopefully from his (modest) feast or famine type gig industry.

Thank you for the practical suggestions and also your ideas around framing approaches he might listen to. I’ve no idea why the IFA suggested he see a pensions adviser. Maybe IFA hasn’t got extra time to explain concepts that might seem uncontroversial to their other clients.

I will look into what I can add via my own pension. I have been feeling overwhelmed and paralysed because I have been focused on the DC and leaving DH to be responsible for his own finances and have now discovered at the 11th hour that he isn’t up to that.

A pension will be a lot more tax efficient than an isa.

He should also check pension credits on gov website so should you

Do you have a pension? Can you pay more in to offset him?

Eg he pays more day to day costs you push more into pension?

I'd do a sipp personally. Mse website is a great place to start - the forum there is brilliant too

Have you both got Gov. Gateway accounts to check your State Pension position, he has been paying Class 2 NI, hopefully? Needs checking asap.

I found I was 6 years short and managed to make them up with a combination of NI credits for looking after my Grandson and then DH employing me/ paying me just above the Lower earnings limit so neither of us actually pay NI but I get the credits.

Look at Meaningful Money. They have an academy with free courses about the basics which you both might value, as well as 600+ podcasts on a whole range of financial topics. If your DH tends to extremes, I’d say Pete Matthew’s would be a great, calm counterpoint.

I’ve no idea why the IFA suggested he see a pensions adviser.

could it be that your husband was not receptive towards the pension advice the IFA suggested, so he felt it would be easier to refer him rather than keep explaining stuff to him…