Pensions n ting.

[Ozwin]

This is probably a stupid question but I thought I'd ask for some help, how do they actually work?

I'm 22, work about 30 hours a week and I don't really know how they work so a crash course on the subject would be nice haha.

Does a % of your wage go towards it every payday or what? What happens if you change jobs/companies? How old are most people when they set it all up?

Cheers.

[stez]

age-wise the ealier the better

have a read of martin lewis' website. it's a treasure trove

www.themoneysavingexpert.co.uk

[Guest MattP]

Start saving ASAP, the state one in all probability won't be there when we get to that age. Then just hope and pray you don't get another Gordon Brown along so desperate to keep himself in power he'll steal it.

Ask your employer if they have a pension scheme first off, they should be able to take you through it.

[stez]

i started my private pension when i was 18, but had to stop paying in, when finances got tight over the last few years. but more recently i looked at restarting it, but just to complicated things prudential said that if i'd been offered a stake holder, or whatever they're called these days, i couldn't restart paying into my old pension....it turns out i ma've been offered one years ago, so now i'm looking at what i need to do now.

i'm at the wrong end of my working life really (despite only being half way through) to get anything deent at the end of it, unless i'm willing to pay silly amount of money in. so, yes, start one as early as possible and get good advice (via martin lewis)

[jonthefox]

This is probably a stupid question but I thought I'd ask for some help, how do they actually work?

I'm 22, work about 30 hours a week and I don't really know how they work so a crash course on the subject would be nice haha.

Does a % of your wage go towards it every payday or what? What happens if you change jobs/companies? How old are most people when they set it all up?

Cheers.

If you change your job often (or indeed ever) then a stakeholder pension is probably right for you. You can pay as much or as little as you like, but to echo everyone else, get saving now.

[Ozwin]

If you change your job often (or indeed ever) then a stakeholder pension is probably right for you. You can pay as much or as little as you like, but to echo everyone else, get saving now.

I don't really even know the basics of how they work.

You pay in as much or as little as you like whenever you want? Are you allowed to take it back whenever or is it perminantly stored somewhere until you're 60 something? (Probably 80 something by then.)

[jonthefox]

I don't really even know the basics of how they work.

You pay in as much or as little as you like whenever you want? Are you allowed to take it back whenever or is it perminantly stored somewhere until you're 60 something? (Probably 80 something by then.)

You can swap your 'fund'to another provider if you wish, but you cant have your pension until your 55.

Dont forget you get tax relief (20%) added to your fund too, and your get interest on your money as well. So there a very good way to save.

[Nick]

Call the Pensions Advisory Service free - they really can put it all in Lamen's terms for you - I found them really useful when switching providers:

http://www.pensionsadvisoryservice.org.uk/

[acooling08]

I never really understood the point of pensions. Why not just open a savings account instead because you avoid tax that way? This is probably a stupid question but humour me.

[Ozwin]

I never really understood the point of pensions. Why not just open a savings account instead because you avoid tax that way? This is probably a stupid question but humour me.

Because for every £200 you get another £50 or something I read earlier. Might be a load of bollocks.

[ozleicester]

As you grow older, you'll find the only things you regret are the things you didn't do. ~Zachary Scott

[jonthefox]

I never really understood the point of pensions. Why not just open a savings account instead because you avoid tax that way? This is probably a stupid question but humour me.

Because (for me anyway) the temptation to draw it out and blow it on a cruise is always there.

[Bellend Sebastian]

I've bored you all shitless about aquariums so I'll try not to do so again on this subject but as this is my job hopefully folk won't mind too much.

A pension is just a savings vehicle that you use to build up a fund to provide you with an income in retirement. As other folk have already pointed out, its main advantage is tax relief on the contributions you put in - free money, basically. Once in, the fund is treated the same as an ISA, tax wise. It's not really worth me talking about what happens at retirement because it's a) a bit boring and b) will probably have changed by all recognition by the time most of the youthful FT population get there.

A stakeholder pension is just a pension contract that has to meet certain criteria about flexibility and charges. They were introduced as a lot of pension contracts used to be really expensive and poor value, and it was perceived that this was putting folk off making provision for their retirement. It's not really worked, in that most of us are still doing not nearly enough, hence the impending arrival of NEST, which introduces some compulsion to both employers and employees to start saving.

The key to making pensions work is simply making sure yours is invested in something that actually makes some money (unless you're lucky enough to be in a final salary scheme where you don't have to worry about that). I meet people all the time that say pensions are shit and a waste of time, but these are nearly always folk that didn't take any care or advice on what their pension was invested in

[dave the caveman]

The key to making pensions work is simply making sure yours is invested in something that actually makes some money (unless you're lucky enough to be in a final salary scheme where you don't have to worry about that). I meet people all the time that say pensions are shit and a waste of time, but these are nearly always folk that didn't take any care or advice on what their pension was invested in

Isn't it the case that most people don't have any choice where their pensions are invested? I'm pretty sure mine is invested on my behalf.

Personally I prefer stocks and shares ISA's for long term savings. Very similar tax benefit (possibly better? taking into account annuities) at the end of the day, combined with much more hands-on control over where the money is invested.

I still pay into my pension because my employer matches contributions up to 4% (public sector workers, this is what you are missing), so it makes sense to make an immediate 20% tax gain plus another immediate 100% on the matched contribution. Not many investments are that profitable. But I'm still uneasy about it. Would much prefer to have full control over my money. I have no idea what kind of management charges the pension provider have in place but i imagine they are outrageous, and I don't know what would happen to my money if the pension provider went under.

The ideal solution for me would be my employer paying into a Self Invested Personal Pension (SIPP) but I can't see them ever doing that because I guess they make money somehow from having everyone enrolled on the same plan with the same provider.

[UpTheLeagueFox]

I started paying into a pension when I was about 20.

I currently pay £320 per month and the Govt tops it up to £400. Free money from them and investing in my retirement years.

I *think* I'm doing the right thing...

[jonthefox]

I started paying into a pension when I was about 20.

I currently pay £320 per month and the Govt tops it up to £400. Free money from them and investing in my retirement years.

I *think* I'm doing the right thing...

Jesus, how can you afford that.

[sphericalfox]

Jesus, how can you afford that.

Sponsored by Talksport.

[UpTheLeagueFox]

Jesus, how can you afford that.

My five year fixed rate mortgage has just ended (seemed like a good idea at the time, d'oh) and it has saved me a fucckload per month so I'm using part of that for the pension instead of pisssssing it up the wall on something stupid.

[jonthefox]

My five year fixed rate mortgage has just ended (seemed like a good idea at the time, d'oh) and it has saved me a fucckload per month so I'm using part of that for the pension instead of pisssssing it up the wall on something stupid.

Yes,i had the good sense to get one of those. I'm currently paying 300 a month more that i should.

[UpTheLeagueFox]

I'm currently paying 300 a month more that i should.

Mine has dropped over £200 per month since going onto a variable rate so I'm lobbing most of it into the pension.

[Ilkeston_Fox]

I've got two pensions (I've just turned 27). I thought I'd automatically joined the work pension when I started - this should have been the case but for what ever reason this wasn't done. 8 years in to the job it suddenly dawned on me that I'm not having enough money taken out and so couldn't be paying into any scheme.

Cut a long story short, I'm now in the work scheme, paying 7% weekly with an additional 5% on top of that. I've also got a private pension which I pay 8% into, it's kicking me in the nuts but as others have said, if you can afford to pay that little more now, you'll reap the rewards later in life. I'm sure once kids come along etc I'll have to reevaluate what goes where but until then....save save save.

[UpTheLeagueFox]

once kids come along etc I'll have to reevaluate what goes where but until then....save save save.

Wise words indeed. My view is that while I can afford to save, I do. Rainy days will come and it's best to be prepared.

[dave the caveman]

Is having all of your money locked up in a pension the best preparation for a rainy day? What if the rainy day comes before you turn 55?

I can understand contributing up to the point where your employer matches contributions, but putting in any more than that is unnecessary when you can just put it into an ISA instead. I'm pretty sure the overall tax benefits work out about the same.

[Ozwin]

I wish I could get a mortgage and own my own house. But I don't earn nearly enough

[jonthefox]

I need to save more. The thought of being a pensioner who can't afford to put the heating on fills me with dread.