[Closed] No pension - what to do???

get a pension? tax efficient and far less hassle than managing a rental
(just go see an ifa and take their advice)

I would go with the pension especially if you are a higher rate tax payer

Eat the rich?

Get a pension, or sell a kidney.

But seriously, you do need to make some plans, your faimily will be counting on it.

you need to put a lot of money into a pension to make it worthwhile though - i'd go have a chat with someone who can give you some good professional advice

Professional advice would be a good place to start, or at least some googling. These kind of basic financial stuff are often written about in the personal finance section of broadsheet newspapers.

I'd look into an employer pension if they offer it. People criticise the fees and returns etc. but compared to merely saving you will get tax relief and often an employer contribution. I put in 5% and my employer puts in 10% so that a great return right there.

You might also want to consider life insurance if you don't already have it so that your familly can survive if you keel over.

The tax benefits of putting money into a pension mean it is usually a better way of investing for the future, to a point. A rental income can be another investment but, IME, is a lot more risky (what if the tenants don't pay up? What if they wreck the place - you need spare capital to both maintain and invest in it). At your age, it is definately not too late to start a pension. As long as you are prepared to start saving for the future even if it means cutting your current spending - and this is the case whether you invest in cash, shares, property, fine arts or a pension scheme. You still have near 40 years to save. If your employer has a scheme, sign into it, as their contribution can be worth a lot. It not, a personal SIPP is still worthwhile and depending how money savvy you are, you have more say over what investments to make (funds, individual shares etc.) If you aren't comfortable with making those decisions, get the advise of IFAs and go with low risk, steady investments (funds that invest in the bigger companies). An IFA is a good idea as they should talk you through just how much money you need at the start of retirement in your pension pot for a given income, and it will probably seem quite scary! (around £100,000 at present day i.e. ignoring inflation gives an income of around £6000-7000 per year. To take home £18000-20000 per year equivalent at todays prices, you need to have around £300,000 in a pot at retirement, which ignoring inflation but allowing for the tax contribution from HMRC and a bit of growth on the stock exchange is still a big chunk of your salary every year*). But I would emphasise, at least with a pension, you buy a guaranteed annuity which will pay out until you die (and afterwards to your wife if you chose such an annuity) whereas property income can be unreliable.

(* I checked these numbers a few years ago and so they may be inaccurate - go see an IFA and do some internet reading!)

[i]what's the best thing to do?[/i]

Talk to an IFA.

thanks guys, sounds like I need to speak to the pros' then

I have life & critical illness cover.

Why not educate yourself about financial matters rather than relying on an ifa? Then manage your money yourself in a SIPP - you'll probably do just as well as the so called professionals, it'll be cheaper and you'll have nobody else to blame.

Don't worry about the future, in about 20 years the oil wars will start, and the world will devolve into a fiery ball of death 😈

I might buy loads of Orange 5's and sell them second hand for ridiculous money in a few years?

thats a plan!

as for managing things my self I dont even have a clue what a "SIPP" is!

as for managing things my self I dont even have a clue what a "SIPP" is!

Like I said start educating yourself - even if you don't manage your money to start off with it's something you can work towards.

Don't worry about the future, in about 20 years the oil wars will start, and the world will devolve into a fiery ball of death

This.

(around £100,000 at present day i.e. ignoring inflation gives an income of around £6000-7000 per year. To take home £18000-20000 per year equivalent at todays prices, you need to have around £300,000 in a pot at retirement

I heard something about this on the Money Programme recently - check iPlayer if you're interested. Those figures are still more or less correct, but if you're looking for an index-linked income paying from 65 onwards then your £100k will buy you about £3k pa.

It's still income and so is taxable, so konagirl's unindexed income of £18-20k from a pot of £300k will be before tax, not take-home.

You could always get a job in the public sector 😉

Yes come and join in the public sector gravy train where 700,000 people are loosing their job, pay increase have been frozen for 4 years min and they want us to work till we are so old only the nursing home will collect our pension.
I pay £200 a month towards my pesnion, i would think thats the min amount you want to be looking at. Might give you £150k or so in todays money which would buy you about £5k a year. Or about £100 a week. On top of that you will get you state pension which is about £150 a week so that £250 a week in todays money. Not a huge amount but you could probably get on ok with it assuming you have no mortgage or kids to support.

Want my advice buy shares in the big oil companies as over the next 30 years that where the money will be, that and small arms, home defence stuff.

sefton, for an alternative point of view (not advice)

We are doing the opposite to the advice here. We are buying a second home and using it for ours and our family's pleasure. I'm using my pension pot to do this. Our view is enjoy the money now while we are young enough and our kids are here and then spend our old age grumpy as **** and chuntering on about having no money.

Pensions are investments, they can go up or down or the company holding can go bust. Which has happened with Equitable life. Houses are bricks, their value can go up and down but you still have bricks. I think your attitude to later life should dictate what you do, we live in the present as the future usually takes care of itself (for us anyway).

"buy land because they aren't making any more of it"

can't remeber who said it, but it's true. i don't think you'll ever loose if you buy land/property.

obviously property has running costs which you'll have to budget for. whereas land is land. sell it on when you need the money (or have planning permission granted) and in the meantime build a pump track.

i think it is only worth considering if you have the money upfront. otherwise most of what you are "investing" is simply paying off the bank - i.e. interest.

a SIPP is a "Self Invested Private Pension". the government give you 20p for every £1 you invest (pls correct me if i'm wrong) so it's a good deal. your money isn't with the government. you invest it into a private pension scheme. have a look at the likes of Hargreaves and Lansdown.
as a rough guide your pot should double every ten years. so if you invested 10k now it'd be worth 20k, but on top of that you've got the contributions that you have been making over the last 10 years.

Property has always been the best long term investment.

"buy land because they aren't making any more of it"

Land sat around is mostly tied up money, and you can rarely get a mortgage on land. A property you can rent out at a profit is working for you, esp. if 80% is mortgaged

I agree with MSP,except i don't think it will take as long as 20 years!

[url= http://www.amazon.co.uk/Richest-Man-Babylon-George-Clason/dp/0451205367/ref=sr_1_1?ie=UTF8&qid=1326195561&sr=8-1 ]Have a read of this.[/url]

Took an hr or so before get a PS job. things must be slipping here.

I pay £300 month into my pension, still waiting to see outcome of our reform package. Yeah so join the PS and get a gold plated pension.

Better still become an MP as they seem untouchable at the moment.

Id say employers pension scheme is the way to go if possible. Mine match any contributions by me and add another 3-15% dependant on age. This is also self-managed and you can choose a range of services from 100% equity investments to 100% cash based.

Armed robbery in your 70's, whichever way it goes, you'll be taken care of... thinking about it, armed robbery's a bit old school, drug dealing or smuggling?

Agree with what konagirl and johnners said up there. You will need about £300k lump sum to get an annuity of £18-20k pa at current rates. You will be entitled to state pension at 67(or more) which is currently ~£5k per year. Talk of going to £7k in a couple of years.

So how are you going to raise that sort of money over the next 30-40 years?

Educate yourself as above and see an IFA. At least you will know what (s)he is on about so you can ask questions. Possible decisions are different based on weather you are higher or basic rate tax payer. Company pension schemes that are being contributed to are a great start.

I invested in the stock market and bought a buy-to-let property as well as company pension. Another tip - Don't put all your eggs in one basket - caused some of my colleagues a big problem 10 years ago. For instance if you work for a company and you are also in a share scheme with them, if it all goes wrong you lose your job and your savings!

Having your house paid at 31 is a god start though, well done.

At your age you'd need to put around 18% into a pension in order to get half your current salary (in today's terms) when you retire at 65. Employer contributions will reduce your contributions - does your work offer a pension scheme?

Euromillions

Speak to a professional advisor, everyone is different, has different needs and can afford to invest in different initiatives.

For security a balanced portfolio is what you want, i.e. a spread of

Cash
Stock
Pension
Property

Property wise you need to at least be in the position that you have paid off your mortgage by the time you retire. Having no rent or mortgage payments is a must to an easier retirement.

The rest you can split as you see fit, but based on recent events don't over-extend in shares.

I have my savings for retirement currently split somewhere along the lines of

12% pension (plus 10% from employer)
20% cash
25% stocks
remainder going into property.

Kill yourself when you retire.

Not only will this reduce the load on the already crippled NHS and government pension but it will give your wife the opportunity to cash in your life insurance and go on a cruise of the caribbean sucking off big black men before coming home and finding a sensible bloke who planned ahead.

HTH. 😉

It's always a good idea to marry someone a lot younger than you as they'll stay earning well into your retirement.

HTH

At your age you'd need to put around 18% into a pension in order to get half your current salary

you are assuming that the pension managers you choose aren't going to mismanage the fund and lose sh1t loads of money on it, as has happened to a lot of peoples funds recently.

Pay upfront for advice if you go and see someone, don't let them get paid by commission on your new pension as the effect of it on the fund will be large.

Samuri,

Kill yourself when you retire ... it will give your wife the opportunity to cash in your life insurance

Sorry to burst your bubble but life insurance won't pay out for suicide, homicide or drinking yourself to death. Mudshark's proposal is more likely to be successful! 😉

Sorry to burst your bubble but life insurance won't pay out for suicide, homicide or drinking yourself to death. Mudshark's proposal is more likely to be successful!

[i]Kill yourself [b]cleverly so it looks like an accident[/b] when you retire ... it will give your wife the opportunity to cash in your life insurance[/i]

I fixeded it.

you'll probably do just as well as the so called professionals

When I started my pension my advisor recommended making sure I had some money invested in something other than pensions. He was about to retire and his pension hadn't given him the return it should of so he was going to be a lot worse off than expected. If a pensions advisor can't sort his own pension, what hope has he of sorting mine??!

If your working class your be working till you die anyway so just enjoy life now .
The state will have to look after you in one way or another even if your lucky enough to live past 70 . 😆

A funny thing happened to me regarding my pension provision. The two fields on the family farm which had always (since time immemorial) been earmarked for me, were handed over to my brother, along with the rest of the £7m farm. Oh how I laughed. Still not got to the bottom of it. I now intend to write a best seller about how my life changed after my lottery win......

why are pensions seen as good things by most people whereas in the current climate investment bankers (including pension fund managers) are seen as scumbags?

My grandparents are royally fubared financially due to pension funds performing spectacularly badly. There's no way I'm trusting some coked-up city boy to manage my future. Property and a few other bits for me, at least if it goes wrong it will be my fault...

Hedge your bets. Pay in the minimum to a private pension to make what pays out at 65 livable. Stack up multiple ISAs. Buy long term assets.

Or buy a service revolver, which is effectively what I'm doing.

31, don't worry about it, nor will anyone else by the time you want to retire.

anotherdeadhero at retirement.....

[img] [/img]

company scheme is only thing i've got at the moment - i'm 39, been paying in for 4 years, I put in 5% and the company match it.
It won't be enough come retirement time, but at least i'd have only paid for half of it!

Sefton, I have an exciting opportunity for you please e mail me andyjamieson30@gmail.com

I will then send you a link to my website, this is a genuine opportunity open to anyone serious.

I help people save money and get paid for it, you too can do the same 😀

^ spamdo?

spando - just link to your website here. That way we can all enjoy your exciting offer.

Not read all the posts but can't you now buy property and offset the investment into your pension contribution or something daft like that????

an exciting offer eh 🙄

would you like my sort code & password?

[i]company scheme is only thing i've got at the moment - i'm 39, been paying in for 4 years, I put in 5% and the company match it.[/i]

You need a goodly amount going into a pension, as a guide - half your age as a percentage, would be a good start...

So really 20% in total for this chap.

As somebody said, educate yourself and diversify.
Pensions may perform badly but its relative, given the contributions from employers (soon to be mandertory) and the tax benefits in spite of the the pension providers creaming money off the top they are still one of the best investments.
Invest in a cash ISA alongside this and this can be used as a draw down or income generator on retirement.
Listen to Money Box on Radio 4 often a good source.

So what would anyone do in my position?...

Have a couple of pensions but not currently paying in due to current circumstances.

£115k mortgage

About to get a £90k windfall.

Do I put it all into my flexible mortgage account and aim to pay it off quickly by overpaying at the rate I currently pay at?

Do I put some in the mortgage and invest the rest in pensions and/or ISAs etc?

I really don't know what to do for the best.

mastiles_fanylion - do you expect to live to 65?

This information is key.

You've paid your mortgage off at 31? Jeez I think I need to be asking you for financial advice!

it will give your wife the opportunity to cash in your life insurance and go on a cruise of the caribbean sucking off big black men before coming home and finding a sensible bloke who planned ahead.

mastiles_fanylion - Member
So what would anyone do in my position?

What's your mortgage rate? If it's silly low, as mine is, then no point offsetting your mortgage as can get a better rate in a savings account. A sensible approach might be to reduce your mortgage to a level that feels comfortable then get more speculative with the rest, higher rate tax payers should definitely be paying into a SIPP IMO - or putting lump sums into you company scheme if cost effective and flexible enough. I have a SIPP as my company scheme has a 0.6% annual fee which the SIPP doesn't, both allow me to choose my own funds. I also have unit trusts in ISAs and cash ISAs.

m_f

Depends on your mortage interest rate, and what you can get elsewhere.

Mortgage is (I think) 3.5% with a One Account

I am probably thinking in too simplistic terms but I can't get past the thought of just focussing on paying it off and then when I have more disposable income (ie, when the mortgage is paid off) I can start to invest. I spoke to a financial adviser about it a few months ago and it made my head hurt trying to work out what he was saying.

I have done a couple of online calculator things and reckon I could finish paying it off in around 3 years if I simply put it all into the flexible mortgage (so I could still get to it with no penalties should I need to) then continue to pay the £800 a month I am paying now.

The only investments I could see (that give a significantly higher rate of interest) seemed to mean tying money up for 5+ years and current situation (business is tough, wife works part time, two pre-school children) means I prefer the idea of reducing monthly outgoings rather than investing.

3.5% is quite high (mine's 0.98%) so I'd pay it off just to keep things on the cautious side - though if you don't already have some other investments maybe put some into unit trusts - maybe £10k?

You know all those rich bankers that we all hate?

One of the reasons that they are rich is because they're in charge of our pension funds.

I have an (almost insignificantly) small pension from back in the day when I used to work for a large industrial company.

My wife is a teacher and so has a (still) reasonable pension provision, though money she "invested" in a private scheme became practically worthless during recent financial troubles.

The only shares I've ever owned (in Bradford and Bingley) went from being worth about £2000 to worthless over a few years.

I can't see myself ever putting any of my money into the hands of fund managers (via a pension or otherwise) because they don't seem to produce results any better than random investment.

My personal strategy is to put any spare money I have into paying down the mortgage.

Once that is clear I'll start worrying about what to do next.

Can I ask a question in here?

When people say you should put in half your ages as a percentage does that mean the total going into the pension or my contribution?

Im 24, I currently put in 4%, company puts in 6% so each month 10% of the value of my wage gets paid into my pension. Does that mean that im nearly at the right level for my age?

Total. I didn't bother until I was well into my late 30s as more interested in building up capital for a house back then - and had no company contribution anyway. Also, if aren't a higher rate tax payer but plan to be(!) wait until then to put more into your pension. I suspect you have to put in 4% to get your company's 6%? If so carry on for sure.

3.5% is quite high (mine's 0.98%)

At 30 with a family you certainly need some plan.

What you do depends entirely on your personal circumstances and your long term goals. Property has historically been the best bet overall, it's most tax efficient to buy the biggest house you can afford (rental property attracts capital gains tax on sale) - you might like to consider how much extra mortgage you could afford vs putting money into your pension. The more tax you pay (higher rate etc) the more attractive a pension is.

It sounds a bit morbid but you may inherit form your parents/relatives - than can provide a chunk of future retirement savings.

crispo - same applies to you, hard to say other than 6% from your employer isn't very generous. If you can afford more now do it but probably better to focus on house/mortgage.

mastiles - are you a taxpayer ? If so then putting some of your windfall into your pension would make sense. I think paying down your mortgage is the most sensible option for some or all of the windfall (you can always re-borrow in the future). Keep a little back in reserve in case your situation gets worse before it gets better.

Yes I am a tax payer and the mortgage is flexible (ie I can overpay into it to pay off interest then take it back out if I need to without limit and instantly).

As some experiences above I am put off by ploughing into pensions - I have three, none of which are very significant but all are worth no more or less than the capital paid into them.

I think I would prefer to put money into ISA accounts that are tax free - just keep banging in the money when each new tax year starts. At least I know the capital will grow year on year).

The half your age percentage is the total; you, employer and tax-rebate

Do you mean a cash ISA? A SIPP is little different to an investment ISA in terms of cost and growth as you can invest in the same funds. - well a decent one anyway. You get your tax back which is a good chunk of cash for a higher rate tax payer. Obviously you can't use before retirement though you can get 25% back in a lump sum - useful for paying off a mortgage.