Pensions - Can Anyone Help?!?
Hi there,
Im 27 year old, work full time as an Electrical Design Engineer and study through work at university for my Engineering Masters Degree.
I have 5 years left at University and will be looking to become a chartered Engineer when im about 34. Obviously i have the natural state pension, but im looking for information about private pensions.
I want to start paying into one monthly which will give me a good retirement package for when i retire. I dont have any knowledge at all of pensions so if someone in the finance industry could give me some advice on whats available, how it works etc that would be great before i go see an advisor.
Also, i dont plan on staying in the UK - ultimate goal is to live, work and retire in USA or Australia - how does this affect a pension?
Thanks@ Old Know All - at no point have i requested specific financial advice from anyone. And quite clearly in my question it states that i intend to visit a financial advisor.
I requested if anyone could explain the available products and what they entail.
Asked by morris994 - 1 year ago
Answer: Best answer
If you have the option to join an employer’s pension scheme, you should do so to benefit from any employer contribution. If not, a private pension could be the answer. There are three types, all of which work in much the same way: stakeholders (simple, limited investment choice, capped costs), personal pensions (a bit more investment choice, no cap on costs) and Self Invested Personal Pensions (SIPPs). Low cost SIPPs offer the ultimate choice of investment funds, shares, ETFs etc and, as the name suggests, are cost effective, in many cases cheaper than a personal pension but there is no cap on costs.
Look at a low cost SIPP from a fund supermarket as this will offer you the best combination of low cost, online functionality, investment reviews etc.
For every £100 you invest in a pension, the government adds £25. Your contributions are invested and grow free of tax until you retire, not before age 55. If you emigrate you will have the option to transfer your pension to your new home country.
At retirement, 25% of the fund can be taken as tax free cash and the remainder is used to provide a taxable income.
There are various pension calculators (www.moneymadeclear.org.uk or www.H-L.co.uk) on the web which will help you decide how much you need to save. Most people start with a relatively modest amount and increase their savings over time.
Disclaimer:
The answers above are for guidance only and should not be acted upon without you receiving independent financial advice relevant to your circumstances. To find an IFA please go to http://www.unbiased.co.uk
Sources:
Danny Cox, Certified Financial Planner, Hargreaves Lansdown
Chartered Financial Planner, Certified Financial Planner and heads the advisory team at Hargreaves Lansdown. Danny is the Money Marketing Best Retirement Planner 2007 and Financial Adviser SIPP Adviser of the Year 2007.