What can you do?
How to get a cheaper, discounted Stakeholder pension
As you see in the state pension section, you can’t rely on the state – either to help you save properly when you’re working or to help you in your old age.
The sooner you get on with it yourself the better. It’s not just a case of “striking while the iron’s hot”. It’s a case of the longer you wait the less you’ll have saved up. (See the cost of delaying and / or the cost of waiting a year).
So, where to begin?
Well perhaps it will help to show you what this writer is doing.
I don’t have any pension at all. Having looked around – to the point of even writing this website fergodsakes – I’ve decided to do the following:
I’m starting a discounted stakeholder pension.
I’ve found it through a firm of IFAs
Through them I’m choosing a reasonably well known company to provide it on the basis that they are charging only 0.9%. That’s cheaper than the 1% stakeholders can charge.
(That means that they’ll only take 0.9% of my fund every year as a fee. In the old days it used to be 5%).
By starting the stakeholder now I’m taking full advantage of all my available tax breaks – which I’ll lose otherwise. (So for every £2 that I put in I get another £1 put in by the government at no extra cost to me.)
I want to start as soon as possible because I can only get these tax breaks until I’m 65. So the longer I leave it the less money I’ll get from the government.
Considering that I’ve been seriously looking at getting a pension for at least 2 years I’ve decided to stop delaying any further and just go for it.
Even if the stock market gets much worse at least I’ve got the extra 30% government tax break coming in at no extra cost to me.
So the stock market would have to lose more than 30% value before I start to lose. Things are bound to move back up in the long run.
But even if it doesn’t at least I’ve started saving for my old age.
I can now wander off and get on with my life.
If something better comes along I can stop my stakeholder and transfer all the money saved into whatever looks better later on. There won’t be any penalty for doing so.