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#1 |
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Forum Member
Join Date: Jun 2016
Posts: 676
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Pensions
Do you have a pension? I am self-employed and do not have one - I am trying to work out whether they are a good idea for self-employed people.
I do intend to keep on working as long as I can (computer-based work, so not too physically taxing). But old people say OHH no, you will not feel like working and will be grateful for a pension when you get to my age! I can't really imagine that will be the case. I like to work to keep myself occupied and my brain active. It would only be a few hours a day and we would have more money than a pension could provide to go on holiday etc. We also have a lot of expenses at the moment. We need a bigger house. We have paid off the mortgage on our current house and would want to pay off any new mortgage asap. I do not like the thought of my money in someone else's hands. Do you have a pension and what % of your salary do you pay into it? |
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#2 |
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Join Date: Feb 2004
Location: Southern East Anglia
Posts: 75,211
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We do have an occupational pension scheme, which is quite good, relatively speaking.
It has got tougher in recent years, especially for new entrants who are in a different scheme. I pay 6.5% towards my pension, which is drawable from 63, and is based on a career average over 40 years. Used to be final salary, but none of them are now, except to those already drawing their pension. We get 60% of the career average assuming the full 40 years has been paid. It has remained, thankfully, index linked - but changed from the RPI to the CPI. Somewhat surprisingly, the age 63 hasn't altered. I expected it to go up. In the event you've done your 40 years before you reach 63, you can either opt to stop paying superannuation contributions, or continue paying to build up for a maximum of a further 7 years. The new entrants pay more and can't draw before 65. That's as of now. |
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#3 |
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Forum Member
Join Date: Jul 2001
Location: Brackley, UK
Posts: 16,657
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Quote:
Do you have a pension?
Though what with Brexit and Trump I may decide to keep working for a while longer just in case it all goes to hell. |
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#4 |
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Forum Member
Join Date: Nov 2002
Posts: 76,808
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My attitude to private or company pensions was soured somewhat by experience of the 1980s with several scandals ........I was paying into a scheme which collapsed and I lost a lot of my money.
When I went self employed 20 years ago I didn't bother with any private scheme Now I'm coming up to 65 in April..............eek ! I still have a small fund left over from that 1980s scheme which might give me around £40 a week or I might consider taking a lump sum Fortunately I just qualify for the New State Pension which started a few months ago and having paid NI for 40 odd years I'll get a minimum £155 a week and maybe more depending on contributions. I'll find out the exact figure a bit near retirement date So I'm looking at £200 plus a week from pensions But like the OP my work is not taxing, all done on the computer at home, a few hours a day and I make more money than I need to live on. I'm healthy and got nothing else to do so I'll just carry on working and the pensions will be a bonus..............
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#5 |
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Forum Member
Join Date: Mar 2008
Posts: 2,281
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Gave up with Pensions about 10 years ago and invested all my spare cash in buy to let property.
Thanks to the renters effectively buying them for me, most are now mortgage free or nearly mortgage free, and I get a steady monthly income meaning I will be able to retire comfortably when I am 50. Even better is that when my kids are old enough, I plan to pass a couple of them over to them to give them a headstart on the property ladder. Happy days! |
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#6 |
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Forum Member
Join Date: Jan 2008
Location: Stoke Prior, Leominster, Hfds
Posts: 1,399
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As people approach the age that they want to retire, it is important that they understand what the procedures will be.
I am only an ordinary pensioner, and these are notes about what I had to do in 2016 to switch from “working” to “retired”. As the law changes continually, I don't claim that this definitely still is up-to-date; it is submitted just as an indication to the procedures. I take no responsibility for any implications of you relying upon my comments. Everyone who has made National Insurance contributions for long enough will be entitled to a state pension. If you have missed years, it is possible to “buy” those missed years – See the official website to find out how many years and how long you have to go back and buy those years. Up until 6 months before you retire, you can get a state pension forecast by applying online. In order to do this, you have to be registered with the Government Gateway. If you aren't, then see the Gateway home page for information on how to do this : http://www.gateway.gov.uk/ Bear in mind that you will receive an activation key through the post when you first join, so this is something that will take a few days to get set up. You can retire early and get less per year, or retire late and get more. So to investigate the options, look it up on the website https://www.gov.uk/browse/working You can see that down the right-hand column of options, there are a couple of links to pensions, so investigate those. You will find that there are several pages under each link, so allow an afternoon to look through them. Do yourself justice – look at it all when you have a bit of energy and can concentrate. Another good source of advice is : http://www.pensionsadvisoryservice.org.uk/ Many people will have a works pension, which when you retire will pay a certain amount every month. They normally are index-linked, and good value for money. People may also have a private pension fund that they pay into. The money you invest can either be a lump sum, regular contributions, or a contribution of both. Fund managers invest the contributions in a pension fund or funds, buying more units the more that you invest. The value of units can go down as well as up, so on a bad year the value of your holding may go down, but it should recover. At the point of pension age, you will get a quote of the final value of the private pension fund that you have, from the manager of each private fund. You then select one (of a number of ) pension annuity bureau to obtain quotes from several annuity providers, to select the pension best for you. More than one pension fund can be processed by one annuity bureau, to buy a single pension annuity. Instead of taking all of the money as a pension annuity, you can opt to take up to ( currently ) 25% as cash, or indeed take more than that as cash BUT you pay tax on it, so maybe NOT a good idea… The customer advisor of the pension annuity bureau conducts a 20-minute interview on the phone, to go through the options, and to explain all of the issues. For instance if you have any medical problems, and so possibly might have a lower life expectancy, you may be entitled to a higher amount each month if you ( say ) are only going to live for 20 and not 30 years. There are variations on the annuities available. I opted for one that paid a lower amount at the start, but was linked to inflation, so will retain value over my remaining lifetime ( currently for men, we live on average another 19 years, and women a few years longer, according to the “normal distribution curve” ). At the end of the processing by the annuity bureau, you will be presented with a list of quotes from ( say ) half a dozen annuity providers, and you then select one of those. The annuity bureau then send you the contract to read through, and to sign one to return. The chosen annuity provider will then make contact with you to arrange to start the monthly payments. So in my case I had a state pension, a company pension and an annuity. The state pension is paid every 4 weeks into a bank or building society account. The company and private pensions are paid monthly. As regards tax, the state pension is tax free as it is the first to come out of the tax-free allowance. The tax code we are given is the tax allowance minus the state pension. Next to come out of the tax-free allowance is the company pension, and lastly the private pension. The same tax rates apply to pensioners as to everyone else. Supposing that you have a state pension of £9,000 and the tax-free allowance is £11,000. The tax code that you end up with is £11,000 - £9,000 = £2,000 = code 200. Regarding when to retire, I opted to retire at the traditional age of 65 ( being one of the last to get the normal state pension at 65 ). Yes, I could have carried on; both my employer and my customers begged me to do so, but to me, time was the most important issue to me. Not only do I have a big garden and old property, I wanted to be able to study – the “third age” is a tremendous learning opportunity. Indeed, I'm doing so, and it is a thoroughly rewarding activity. So please think of the cultural and social opportunities of having free time, as well as the purely financial side. Don't get to 75 and retire, thinking “I've only got 8-10 years left – I WISH that I'd retired earlier to do all the things that I want to do”. |
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#7 |
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Forum Member
Join Date: Feb 2014
Location: With MyAndy!
Posts: 15,178
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Quote:
Do you have a pension? I am self-employed and do not have one - I am trying to work out whether they are a good idea for self-employed people.
I do intend to keep on working as long as I can (computer-based work, so not too physically taxing). But old people say OHH no, you will not feel like working and will be grateful for a pension when you get to my age! I can't really imagine that will be the case. I like to work to keep myself occupied and my brain active. It would only be a few hours a day and we would have more money than a pension could provide to go on holiday etc. We also have a lot of expenses at the moment. We need a bigger house. We have paid off the mortgage on our current house and would want to pay off any new mortgage asap. I do not like the thought of my money in someone else's hands. Do you have a pension and what % of your salary do you pay into it? What if that changes, what if you reach 65/70 and can no longer work, how will you pay your bills, for luxuries etc? If you are wanting to get a bigger mortgage etc, I would advice that you seek out a financial advisor that can give you mortgage advice and help with retirement planning. You might need two as some companies have their advisors specialise in seperate areas. I have one and have done so all my working life but I am employed not self employed. |
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#8 |
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Forum Member
Join Date: Aug 2010
Posts: 11,776
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I don't have a pension and, given that I can't afford a home, I can't really see the point in worrying about a pension. Anything I saved would go in rent anyway, and the government will prop me up with housing benefit if/when I can't work.
If property prices ever become reasonable (say £300K for a one bed flat), then I'd buy a home and start planning for old age. Given that that is unlikely to happen I'll just take it as it comes. The stats show that 50% of the population is renting so that's a lot of people to prop up. I hope everyone who is celebrating the rise in their house price is ready for it. Half the population can't be left homless at pension age and the money to house them is going to have to come from somewhere. |
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#9 |
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Forum Member
Join Date: Jun 2003
Location: Suffolk
Posts: 21,390
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I have a work pension. Not a lot goes into it though. I think I pay about £40 a month and the company match it. I think it's worth about £20k. I also have an old pension with an old employer worth about £10k.
Basically it's bugger all, but as the employers match my contributions I take it. Every little helps. |
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#10 |
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Forum Member
Join Date: Mar 2003
Location: London
Posts: 16,527
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I'm self-emloyed and don't have one, I just spend all the cash I get with reckless abandon, then have to work twice as hard as normal when I have to pay some tax
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#11 |
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Forum Member
Join Date: Oct 2015
Posts: 1,902
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My mum and auntie watched To the Manor Born last night, and they were talking about how in it margo tells the others shes got like 20 pension plans or something, The other guy (bob?) and barbara his wife laugh at her apparently and my mum thought it funny that this show made in the 70s sort of nailed it. Because this Margo woman turns round and says she doesn't want to gov stealing her money in her old age.
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#12 |
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Forum Member
Join Date: Jun 2016
Posts: 676
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Quote:
What if that changes, what if you reach 65/70 and can no longer work, how will you pay your bills, for luxuries etc?
I can do my job sitting in bed with a laptop. The only things I could see stopping me from working is a) mental decline or b) severe physical disability.. In either of these situations, I do not think I will be very interested in "luxuries". |
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#13 |
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Forum Member
Join Date: Feb 2014
Location: With MyAndy!
Posts: 15,178
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Quote:
Well this is the thing. Why would I not be able to work any more?
I can do my job sitting in bed with a laptop. The only things I could see stopping me from working is a) mental decline or b) severe physical disability.. In either of these situations, I do not think I will be very interested in "luxuries". ![]() But thats the point you don't know what will happen, what if your husband falls ill and you need to stop working to care for him and you are noth over 65 |
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#14 |
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Forum Member
Join Date: Feb 2004
Location: Southern East Anglia
Posts: 75,211
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Quote:
I have a work pension. Not a lot goes into it though. I think I pay about £40 a month and the company match it. I think it's worth about £20k. I also have an old pension with an old employer worth about £10k.
Basically it's bugger all, but as the employers match my contributions I take it. Every little helps. |
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#15 |
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Forum Member
Join Date: Apr 2015
Location: California
Posts: 1,364
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I am a firm believer in saving for retirement, we both saved money into individual retirement accounts, & now we are retired it has been a blessing, for instance our car broke down, so we were able to draw the money out to get it fixed.
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#16 |
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Forum Member
Join Date: Nov 2010
Location: Midlands, UK
Posts: 4,964
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I've been paying 4% of my salary into a group personal pension plan through my employer since I was 22. They match my contributions.
I'll still need to work to a good age for it to be worth retiring. Basically I'd need to stay working and paying into the pension until I can take my state pension -- with the combined income I should be okay. |
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#17 |
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Forum Member
Join Date: May 2002
Location: GL51 0EX
Posts: 14,090
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Quote:
Do you have a pension? I am self-employed and do not have one - I am trying to work out whether they are a good idea for self-employed people.
In very simple terms the key to avoiding stock market impact is to pay in over a long time, so that the losses you make when the market falls are balanced by you then buying as it rises again. Worrying about what happens in one year or month is pointless as it's only when you come to draw it that really counts. As you near retirement age switching to more low risk investments will mitigate against the last minute tanking of the market I would imagine the tax relief you'll get (till the government decides to stop that) will more than balance out the additional interest you'd pay on any new mortgage. The tax relief really is the key. If you have "spare" cash it's one hell of a return, No reason why you couldn't carry on working and draw your pension, or defer it till you really need it Quote:
I do not like the thought of my money in someone else's hands
Of course that doesn't mean their systems won't screw up - but again, so do the banks. The difference with a pension company is as long as you actually check your annual statements and complain when you spot they've screwed up - then you can be compensated before it becomes a big issue for you. Most of the issue that do arise tend to be either with people who have made a lot of changes, switching funds, changing contribution levels, stopping and restarting - and doing so constantly for years or decades or at the other end of the scale, brand new products launched to take account of the latest round of legislative changes |
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#18 |
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Forum Member
Join Date: Apr 2015
Location: London
Posts: 441
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Just the government scheme, started last month, so pennies really so far. I accrued a little bit from my previous job, but they hadn't set up the company scheme yet so I then was paid the lump sum in my last pay, and I believe I spent it on ticking myself over until I started my new job.
I do worry about it though. My salary is quite tiny and I'm already 30, so I don't imagine I'll ever be able to build up a decent pot, but I also don't want to work myself into a grave, I will want to retire in my time. There will be no inheritance coming my way either, so I need to sort myself out somehow. |
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#19 |
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Join Date: May 2011
Posts: 1,466
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Hmmm - not sure I'd call a combined pension of £30k a year "bugger all". That's more than the average working wage!
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#20 |
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Forum Member
Join Date: Feb 2004
Location: Southern East Anglia
Posts: 75,211
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Quote:
I may have got it wrong but I read the £30k as being the value of two defined contribution schemes, not an annual pension under a defined benefit scheme.
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#21 |
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Forum Member
Join Date: Apr 2006
Posts: 870
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Quote:
I have a work pension. Not a lot goes into it though. I think I pay about £40 a month and the company match it. I think it's worth about £20k. I also have an old pension with an old employer worth about £10k.
Basically it's bugger all, but as the employers match my contributions I take it. Every little helps. |
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#22 |
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Forum Member
Join Date: Jul 2001
Location: Brackley, UK
Posts: 16,657
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Quote:
Well I did wonder that, but it doesn't seem much for £40 per month.
30*12*£40=£14,400. To have doubled that amount would be very impressive. My pensions have averaged around 7% over the 30 years I've been contributing to them. However to only have a fund of £30k after 30 years of working is not that impressive. I don't remember what my first payment was but I chose a 10% annual escalator for them. The last time I contributed (two years ago) I was paying over £1k a month. For my entire working life my pension payments have always been the biggest bill. Bigger even than my mortgage payments. |
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#23 |
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Forum Member
Join Date: Feb 2004
Location: Southern East Anglia
Posts: 75,211
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Quote:
It does to me. If we assume 30 years of working then:
30*12*£40=£14,400. To have doubled that amount would be very impressive. My pensions have averaged around 7% over the 30 years I've been contributing to them. However to only have a fund of £30k after 30 years of working is not that impressive. I don't remember what my first payment was but I chose a 10% annual escalator for them. The last time I contributed (two years ago) I was paying over £1k a month. For my entire working life my pension payments have always been the biggest bill. Bigger even than my mortgage payments. I think I may have been unfairly comparing it with our occupational scheme. |
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#24 |
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Forum Member
Join Date: Mar 2007
Posts: 11,685
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I don't understand this at all. My state pension estimate tells me that I have 42 qualifying years and will get £147.60 a week when I retire instead of the full amount. Apparently this is because of a contracted out period which I had no idea about. I am theoretically self-employed, but I haven't earned a penny this year due to problems with gout/arthritis and having to spend time caring for my father. I really don't know whether it would be worth me volunteering to pay Type 2 contributions or even whether I need to. I will try to see someone at the CAB, but I wondered if anybody on here recognises this problem.
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#25 |
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Forum Member
Join Date: May 2002
Location: GL51 0EX
Posts: 14,090
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Quote:
I don't understand this at all. My state pension estimate tells me that I have 42 qualifying years and will get £147.60 a week when I retire instead of the full amount. Apparently this is because of a contracted out period which I had no idea about.
For years where you didn't pay enough contributions - and are still within the window to top up (last 6 years) - it will tell you the amount you need to pay if you want to make that year up, or it will simply say too late to pay You will be able to tell from that when they think you were contracted out (which basically means part of your NI contribution was being diverted into a works pension pot rather than going into the government one). From there it comes down to if you were actually in a works pension at the time. If you were not then it's a case of contacting them and disputing it. If you were paying into a works pension then it's far more likely that you were contracted out, and didn't realise the significance at the time (it wasn't explained very well in a lot of cases). In this case you need to track down that pension (if you don't have it already). For that I would start here: https://www.gov.uk/find-pension-contact-details Quote:
I am theoretically self-employed, but I haven't earned a penny this year due to problems with gout/arthritis and having to spend time caring for my father.
Ultimately you need to build up 35 years worth of NI by the time you draw the pension. £147 implies you'll have a little over 33 years where you are not contracted out. If you can top it up, and you trace the pension your contracted out payments went into you'd end up with the full state pension plus whatever the private one pays |
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