Pensions for older people
Think You've Left it Too Late?

Intro

It's never too late

Useful Newspaper Articles

How to start a pension at the moment you retire

Alternative ways of saving

Intro

A lot of people in the fifties and sixties are concerned at their retirement prospects.

Either they haven't bothered saving or their savings don't look as if they'll suffice - particularly with the very low annuity rates on offer currently.

For the first category there's some good news in that the Government recently introduced a Minimum Income Guarantee. This operates on a means tested basis. (The last time we looked it was £92.15 a week for a single person and £140 for a couple).

For those who've tried to save but whose pension funds - or other retirement plans - haven't done as well as hoped for, the comfort is that at least they'll get this too. (We'll ignore the fact it's not that fair in that they presumably made some sacrifices to save while the others weren't bothering).

The irony about the Minimum Income Guarantee is that after a certain point it can mean it's not worth bothering to save for retirement.

However there are various alternatives to consider rather than accepting what is still a pretty low income.

As the articles we link you to below point out, the main option is to reduce your consumerist expectations and keep working.

This may not be as bad as it sounds in that it's certainly a way to stay healthy. (Many early retirees seem to peg it somewhat early or at best lapse into the torpor of the extremely bored). And maybe it's time to give up on always having the latest accessories anyway.

As far as working goes: The fact is there are quite a few business opportunities out there that could be suitable for the "elderly" ie require brain rather than muscle power and the wisdom that comes with experience. With the advent of new working practices ie part -time, home based, computers and the internet etc it's not necessarily as bad as it sounds.

To Top of This Section

Pension Basics Contents

It's never too late to start a pension

It really is never too late to start a pension because of the tax incentives involved and the number of different ways that you can go about arranging things.

While it is much cheaper to save over a longer period, ie to start as young as possible, don't give up hope no matter how old you are. (See cost of delaying your pension).

You could even start a pension at the moment you retire. To see an example of how click here;

The best thing you can do is speak to an IFA who should have several useful ideas for you.

Be wary that recommendations may be linked to the commission your IFA may get.

By law, you'll be shown their commission before going ahead with anything. Don't be shy about challenging them about it.

To counter this problem:

• Shop around for an IFA. Go for word of mouth recommended ones.
  
  
• Use more than one IFA and compare what they say. don't feel bad about playing them off against each other.
  
  
• Consider paying your IFA fees rather than commission. Read about fees vs Commission now

Also check out public type sources like the TUC, (Tel 020 7636 4030) your local Citizen's Advice Bureau and even personal finance journalists on national newspapers. These guys always need something to write about and most have a "what the experts say" type section - where they could use your case.

See Useful Contacts for a few other possible public sources

To Top of This Section

Pension Basics Contents

Useful Newspaper Articles

Here are some articles on the subject of what to do if you're getting in to the grey hair zone and haven't necessarliy got a sizeable pension fund:

On the road again - in my late 50s

The generation whose icons were Kerouac and Kesey now can't afford to stop work, writes Mike Nicks

Mike Nicks
Observer, Sunday March 3, 2002

I had just earned the biggest salary of my life - a hefty ?125,000, including bonuses - when the axe fell. Unnerved by the recession, the British company I was worked for sold its US operation. Time for my wife and me to... Read more

If there's any problem with the link go to the archive direct. Copy the title (above) into the search bar and it should find it for you.

...and for the second in the series

An innocent caught out in the hard rain

Baby boomer Mike Nicks checks the options for lifetime workers

Mike Nicks
Observer, Sunday March 10, 2002

It would be so tempting to walk away from the whole pensions and stock market debacle in disgust at the moment. Returns from pensions and equities look increasingly disappointing: you may even feel a sense of outrage as you see your wealth shrink rather than grow... Read more

If there's any problem with the link go to the archive direct. Copy the title (above) into the search bar and it should find it for you.

To Top of This Section

Pension Basics Contents

How to start a pension at the moment you retire

Say you're a 65 year old male. You've saved £12,000. You put this into a pension. You immediately get £8,000 added by the taxman at no extra cost to you (assuming you're on the 40% higher rate tax band).

You've now got £20,000.

You can take 25% of this as an immediate tax free lump sum (i.e. £5,000).

You then buy an annuity with the remaining £15,000. At present rates this could get you £1,200 pa. This may not sound much but is an increase of over 30% on the state pension of around £3,510.

If you are relatively old and want to consider saving for retirement, there are many different possibilities.

To Top of This Section

Pension Basics Contents