Pensions

[edgarcat]

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I had the same issue - I had a pension with my previous company but am not allowed to 'add' to it as I no longer work for them.

The options to me were a stakeholder pension or a 'private' one (perhas that is a stakeholder??!!) I did start a Virgin one, but after putting £500 in realised I wasn't in much of a position to add to it so have let it 'rest' - can't get the £500 back until I'm 60!!

If you plan to go back to teaching you may be able to add to it, or at least add AVCs - there should be a 'help line' number on your original pension details.

I'm not sure that starting a stakeholder pension is such a good idea, you'd have to put so much in to make it worthwhile, I don't have a pension now, and as I (hopefully!) won't be returning to work I appreciate that's a bit risky but I have to assume that the value in our property (no mortgage) will be my 'pension provision'.

Sorry for rambling - hope someone else can be more helpful!

edgarcat, you can have a stakeholder, and can pay up to £3,600 into it per year. Other than that, people with no "pensionable income" (earnings in other words) cannot pay into a pension. You can't add to the Teacher's pension (or any other occupational pension) if you are no longer employed there. If you became a teacher again, you could restart contributing, and paying AVCs, or if you were employed by another public sector employer (Local government, civil service, NHS etc), you could transfer your Teacher's pension over on an equal basis. If you join another employer, then it would probably be best to leave the teacher's pension where it is. But at that point, you should really seek proper financial advice - which I am not qualified to give. I can only give the facts.
I wish I knew lots about more interesting subjects.

As I see it, a pension is just a savings scheme designed specifically for old age. The reason pensions per se are preferred rather than other forms of savings (eg ISAs etc) are:-

a) the contributions made are tax-deductible up to a certain limit (so for evey £100 you put in, the taxman puts in 28% for a basic rate tax payer)

b) your employer may also contribute.

The downsides are higher administration charges, and the fact that your money is tied up until you reach pension age as well as the fact that there are some restrictions as to how you can access the money at pension age.

If you are currently a SAHM then the benefits above may not apply, but you will be hit by the downsides. If you eventually intend to return to work you may be better off putting money aside in some other form of savings account (e.g. an ISA). These savings could either be built up over the years or could be used to fund lump sum AVCs when you return to work (thereby getting the additional tax relief at that point).

Stakeholder pension is also an option. Here you don't get any of the benefits listed above but the charges are capped. If you want the discipline of not being able to access the money this may be a suitable route.

You should be able to find a good independent financial adviser who can talk you through the options.

I am reiterating some of what has already been said I think but here goes. If you are a SAHM you can still take out a pension. You can contribute up to £3600 per year to a stakeholder pension. Most of these have an annual charge of 1% or less which is the same as a CAT standard ISA.
Although you are not working you will still benefit from the tax breaks so that for every £78 you pay in, the company will invest £22 and recoup the difference from the Inland Revenue. In that way, if you are not working it is a really good deal. However you have to remember that any money you pay into this kind of pension cannot be got at until you are at least 50 and possibly 60, so if you want the option of taking it out at any time then this is not for you.
By the way, I am on maternity leave from Scottish Widows where I worked with pensions for 5 years which is why I know a bit about it!
Hope this helps..

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Starsky - don't really understand what you mean. If you're not employed, who is the company who will contribute the £22?

I'm also very interested in this, having just taken voluntary redundancy to become a SAHM.

NQWWW - the £22 is not a contribution by an employer it is tax back from the Inland Revenue. As long as you are paying under £3600 a year then your earnings do not need to be checked - it is just assumed that you are earning. Therefore, it is really good for those not working as you are getting tax back when you haven't paid it in the first place. I think it is there to encourage SAHM's to keep on paying into pensions as personal provision by women is about 1/3 of men's pension provision. Plus you are still paying £78 compared to the govt's £22 which is more than you would have been paying if stakeholder was not introduced.
Hopefully this is clear, any other questions I will certainly do my best to answer!!