What Would You Do?

I am in a similar situation without a pension fund AllTheLs, due to over 25 years of being “self employed” and without a regular steady income I have been unable to save. You don’t say how old you are but I’m guessing that when you say “retirement will be at 67” you might be around my age (56) ? I am no expert but putting £10k into a pension fund now could be like throwing it away (unless you could add to it considerably over the next 10 years) I would imagine any pension fund would use some of your meagre savings to manage the account and instead of getting better it could deplete rapidly. I think you should seek proper independent advice. Like you I am very worried about the future and even making it to 67 when I will get a state pension. Good luck to you.

See a financial adviser, don't ask us we are not specialists

Money put into a pension fund is not lost. It remains with you and if you died it would be paid back into your estate for distribution.

It only becomes inaccessible, if you take the money out and buy an annuity with it, that is a regular annual/monthly income paid to you by the company you bought it from. This used to be compulsory on reaching retirement age, but this is no longer so. Even then many companies pay a sum back to the estate if you die within 5 years of taking it out.

As others have said, this is a very complicated subject and the only way you can get the best advice for your particular circumstances is to consult an independent financial advisor. Make sure they are properly registered and here is a link to the regulatory authority.
www.fca.org.uk/firms/financial-services-register

When you retire, if your state pension is small you could be entitled to Pension Credit, a supplement that will increase it, plus help with rent and council text. I suggest you look at the Age UK site www.ageuk.org.uk/information-advice/money-legal/ . They have a lot of Fact Sheets on all aspects of retirement and growing older.

Yes, I am your age, gillybob, and the future is a worry. I can see the 'sensible' thing to do would be to visit a financial advisor, but the one I saw ten years ago advised me to put any extra money into savings, due to my circumstances. Trouble is, as you can see by the amount, I haven't done very well at saving!!!

I’m the same as you AllTheLs it’s a huge worry isn’t it ?

I didn’t say the money would be lost if it was put into a pension M0nica . my point was simply that unless the OP was able to add to it regularly then the cost of managing the fund could well eat into the original amount . Having a 10k pension pot is almost useless, what would it really give you income wise ?

One thing to do is check that you have no ‘missing’years from your state pension. You can buy back years which could be very useful to you. You can check on the pension website or give them a ring.

With 10 years to go the best thing to do would be to maximise your income. Also check your state retirement prediction and see if you can buy back extra years, assuming this is the right thing for you. Pensions are a minefield so the best thing would be an advisor, although where you find a good one, I don't know. I certainly would be wary of risky investments.

Good advice from midgey to check for missing years . This could effect your state pension hugely if there are contributions missing .

I agree with Gillybob the management costs will make the fund disappear in no time.Have you thought about a buy to let mortgage? If property is cheap in your area you might be able to get something that you could rent out ,giving you a small amount after paying the mortgage and the property will rise in value until you retire .
Its what we did with our pension funds as they weren't performing as expected .If you get a long term tenant who will look after the property its a winner

If you have insufficent income when you retire and savings below 10,000 i think you may be entitled to pension credit.Maybe a trip to the CAB to get them to help you i have heard they are brilliant at this kind of thing. Good luck.

Go and talk to Age UK. They can do a pension check and advise you what benefits you could be entitled to.

Remember for every £500 savings over £10,000, any claim to Pension Credit will be reduced by about £2 a week and that you cannot get Council tax benefit if your savings exceed £16,000.

Thanks, all, for your helpful responses.

State pension is less than other comparable countries but it is not that bad unless you have a lot of debts or outgoings. I would concentrate on reducing those as much as possible if you can. I am on a state pension and manage to save and live reasonably comfortably. I am not well enough to travel but I could have a decent holiday if I could.
Planning is important but if you get a pension forecast and look at your entitlements you will probably find that you don't need to also worry.

Excellent idea to check the missing years from your state pension - I 'bought back' a chunk of entitlement years for about £60; what a relief - I thought they would ask for a sum with a lot of noughts. Rules have changed; you don't need so many years now to qualify for a full pension but it's a really important to check this one. Even £20 a week more than you thought can make a big difference.

What I did! not pension age yet but do not work any more.
I looked on the gov. web site and checked if I had enough full paid years for a full state pension.
I paid some as you are allowed Now I am happy to know I will get my full pension allowance when the time comes.

Seeing a financial adviser will cost you for the advice and for administering your money into whatever pot you choose.

travelsafar
Pension credit only brings sub pensions up to the minimum level the state say you can live on which is, at the moment, £163 and change pw.
Look on the website.

Sorry...£164.35pw.

I received the full State Pension back in 2014 and it was £129 Per week.

I now receive Pension Credit too but I don't know how people manage to live and save on that amount.

I too was self employed for many years - as a single parent it enabled me to look after 3 young children, to be there after school etc.

My advice is....and I wish I'd done it sooner.....get either another job or a second job so that you can save some money. Ten hours a week at £10 Per hour will bring in £100 Per week or £5200 Per year.

I did it within 2 years of retirement and earned an extra £800 Per month. I so wish I'd thought of it earlier. But even so it's made a difference.

Remember that NI was paid for you if you were collecting Child Benefit for an under-12year old.

Santander give 1.5 % interest up to £20,000. Better than most. You can also put £200 a month into saving at 5%. This pays out after a year when whole amount is deposited into your ordinary account with the interest. You then start again. I found Santander very helpful.

You also near to consider market movements as the value of you initial investment plus any regular additional amounts you make would be affected not only by the investment fees but by stock market results, either up or down, unless of course you put it into a cash fund. Most pension contributions rely on long term returns hence the reason to encourage people to invest as young as possible. See an IFA before you decide what to do.

I was self employed and paid voluntary class 2 stamp at a cost of £11.00 per month. Paid by DD.
Pension begins March 2019 and forecast for full pension.

Also had small private pension pot, £20,000.00, I rang round annuitiy providers for quotes, took best quote and rang back others to ask if they could match or beat , this was for non index linked pension that continues with spouse after my death.
The annuity provider ring around went on for about a month and went up from an initial £750 a year to £1150.00 a year. About £22:00 a week.
I took small savings plans out in my 20s, £5 and £10 a month, these matured this year and paid out £30,000:00.
I put £20,000.00 into a fixed rate 5 yr bond @2.7% return and £10,000.00 into a five year fixed rate ISA @%2.3 return.
I also have PIP daily care and mobility which are contributions based and carry on after 65, so further £220:00 a month plus mobility car.
Also took out Life insurance with linked savings in my 20s, whole of life and took Waiver of Premium option, so ceased paying it in 2012 and it continues with £15,000.00 life cover and £3000.00 savings pot.
Never had overdraft, mortgage paid off, own house, no card debts or any debts.
Only way is to start young.........But then again, times are very different and it would not be the same starting again now.

I was managing on the state pension by dipping into savings. When my savings got below £10,000 I applied for Pension credit and because I did still have savings got Pension Credit Garantee. Did not have to pay Council Tax. When my mobility got bad I applied for Attendant Allowance. Got Lower end. But my Pension was increased as well. I manage very well on £280 a week. Have always been thrifty.never been to hairdressers etc. Never have liked eating out. Have help with dentist, opticians etc. No longer able to go on holiday.