Pension for an 18 year old

DerKaiser said:
I think it is clear cut that you'll get the most out of your pension if all proceeds are taxed below the higher rate of tax and all contributions get relief at the higher rate of tax.
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It certainly is.... But the question is a pension for an 18 yr old a viable option. That question is not clear cut...
 
I wouldn't assume that the upper rate tax relief on contributions will last for ever - future-proof whatever strategy you choose.
 
Complainer said:
I wouldn't assume that the upper rate tax relief on contributions will last for ever - future-proof whatever strategy you choose.
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Good point.

Problem is that reactive changes to tax legislation leave people with a lot of uncertainty around where and when they should invest.

What we need is a sensible and stable long term taxation strategy, not one that is influenced by lobby groups or indeed when the media are after their pound of flesh.
 
I was offered a pension when I was 18 and thought it was a waste of money; when I did eventually start one in my late thirties I ended up paying a serious chunk out of my weekly wages. The earlier you start, the less you'll pay in your middle years when you're likely to be struggling with mortgages and providing for children. If you think pensions are a waste of money per se, then you shouldn't bother with one at all, but if you think it's worth starting one in your thirties then it's definitely worth starting one when you're 18.
 
Eggball said:
but if you think it's worth starting one in your thirties then it's definitely worth starting one when you're 18.
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You need to look at it in the context of your overall financial position. Yes, the earlier you start a pension the better for the pension. But your overall financial position may be better if you concentrate your resources on your own house and/or your own business in your early years.
 

Agreed, in the context of big picture,
buying and running a HOUSE will be most important and financially stressful
activity of most people's lives.
Concentrate on getting roof over your head first (saving for deposit)
before worrying about retiring 50 years from now!

Who knows how your career and life will play out,
wait till you are more settled, on bigger pay, and can get better tax break
(ie 30 years old) before BOTHERING to join the pension pyramid scheme.

JR.
 
Eggball - your response is very good - its great to hear someone actually speaking from experience offering a view - i agree and 2nd your view 100%.
 
eirefinq said:
Eggball - your response is very good - its great to hear someone actually speaking from experience offering a view - i agree and 2nd your view 100%.
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do you two work in pensions industry??

there are many options open to 18 year olds,
eg if have discipline to regular save, NOT in a pension,
then when so-called middle age rolls around,
the person can now access their savings AS CASH
for some life events that right now are way higher than retirement.

if they had "saved" in pension instead
cant touch it until HOPEFULLY 65...

and on-top of this, we havent mentioned fund allocation and performance
variable
(an extreme example
if the young person had being "investing" in property based pension fund
from say 1997-2007, probably lost MOST of any worthwhile gain,
and also now, they have probably naturally lose faith with investing
and property, let alone pensions...

JR.
 


just looking back on this - my understanding is that you are allowed to take 25% of the total fund tax free on retirement - if this is the case contributing now (whilst getting the lower tax break) does make sense for this reason. as u get older and earn more the higher tax breaks come into effect at that point. just to re-iterate my view on this subject once again - it is a brilliant idea to start saving for a pension as early into your career as possible - no use in waiting round.
 
eirefinq said:
it is a brilliant idea to start saving for a pension as early into your career as possible - no use in waiting round.
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Unless of course you have a house to buy, or a business to invest in, or anything else to do with your money that doesn't involve tying it up until you retire.
 
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