Pensions For Beginners 2023 - A Complete Guide (UK)
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- Опубликовано: 20 июн 2024
- Pensions For Beginners 2023 - A Complete Guide (UK)
Pensions are a vital tool for building wealth and financial security for your future and later life and are probably the most widely misunderstood financial product out there. The benefits of pensions are huge and numerous, so if you’re not using them you are missing out big time. Let’s change that by giving you a complete beginners guide to pensions. Here's what we will cover with timestamps, please feel free to skip around to the sections relevant to you.
00:00 Introduction
00:50 Types of Pension
03:46 Employer Contributions
04:29 Tax Relief
06:24 Auto Enrolment
07:49 Annual Allowances
08:34 Growing Your Pension
09:54 What Does Your Money Get Invested In?
10:52 Getting Your Money Out
13:27 Yes You Pay Tax, But It Ain't That Bad
14:36 Death Benefits
15:31 One More Thing
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Hi there! My name is Tom Morgan, Founder & Financial Planner of Orca Wealth Ltd, welcome to my RUclips channel ‘That Finance Show’. I’m very glad to have you here because this channel gives me the opportunity to help people and share information with those who wouldn’t normally get it.
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RISK WARNINGS
When investing remember, your capital is at risk. Investments can fall and rise and you may get back less than you invested. Tax treatment depends on your individual circumstances and may be subject to change. This channel is for information and entertainment only. The information provided by Tom and That Finance Show is not intended to address your particular requirements and should not be construed as advice. Neither Tom or ‘That Finance Show’ will not be held responsible for any actions you take as a result of watching these videos.
#pensions
My original retirement plan was to retire at 62, work part-time, and save money. However, high prices for everything have severely affected my plan. I'm concerned if people who went through the 2008 financial crisis had an easier time than I am having now. The stock market is worrying me as my income has decreased, and I fear I won't have enough savings for retirement since I can't contribute as much as before.
It's recommended to save at least 20% of your income in a 401k. You can use online calculators to estimate how much you should save based on your age and income. Saving at least 20% of your income in a 401(k) can help ensure that you have enough money to retire comfortably. By saving this much, you can take advantage of investing in the stock market and potentially grow your retirement savings over time.
Considering the increased complexity since the 2008 crash and COVID, I suggest diversifying your financial portfolio. I hired an advisor and successfully grew my portfolio by over $150K during this turbulent market using defensive strategies that protect and profit from market fluctuations.
Much credit goes to *Camille Alicia Garcia* for her significant contributions. She maintains an online presence, making it easy to locate her. While other advisors might pose challenges to find, Julia has proven to be an excellent mentor throughout the year.
I am going to look her up, I have about $81k i want to start with, might be small but it's better than nothing though. Since the 08 crash is playing out again.
With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly-which means more red ink for portfolios this quarter. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my $275k bond/stock portfolio
The market is volatile at this time, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
I merely looked her up on Google and was highly impressed by her credentials; I got in touch with her because I need all the help I can get. Thanks for sharing!!
Thanks for increasing my knowledge in personal finance and investment, I recently subscribed to your channel. I want to give a big shout-out to all those working tirelessly to earn a living and build wealth during this recession. My husband and I are both retired and debt-free, and we're living smart and frugal with our money. Despite the recession, we're still earning passive income thanks to our savings and investments in the financial market. Investing lifestyle has enabled us to earn a steady monthly income through passive means, and we're grateful for it"
Congratulations on your early retirement, Interesting indeed! Currently, I am in dire need of investment advice or tips. Earlier this year, I hesitated and failed to take any action until now. However, I am determined to try something new, as I am very receptive to various investment ideas. I want to be retired in my forties or fifties.
No problem at all! If you're seeking to earn substantial profits from your investment, I would suggest determining your investment horizon and implementing a long-term plan. I worked with Lewis James Godfrey to create a long-term investment strategy, and he assisted us in managing our investments while we focused on my jobs without any concerns.
Thank you for your advice. It's challenging to find a reliable investment advisor here, and I appreciate your input. Seeing the success you've achieved through investing, I would love to have access to your investment advisor's information if you wouldn't mind sharing it.
I work with *LEWIS JAMES GODFREY,* who is based in the United States. If you would like more information about him, you can conduct a search online. He even got featured on CNN recently.
Working with a skilled financial planner can be compared to having a mentor in the field of finance. I used to struggle to invest on my own and ended up losing money, but things changed once I started working with this same man, Lewis James Godfrey. He played a pivotal role in helping me improve my financial situation. Previously, I relied solely on my job and salary for income, but now I have found ways to generate additional income with ease, which has allowed me to leave traditional employment, thanks to Lewis. Nowadays, I believe that investing is not a choice, but a necessity for anyone who desires financial independence and a good quality of life.
great video, like the way you have segmented it
Thanks very much for your helpful explanation.
So we'll explained..I love pention
Good job !
good job. very slick production. keep on dancing !!
Hi Tom hope you don’t mind me saying this but I really think you would make amazing presenter on tv. Your a natural 😊
Wow, thank you! I'd love to!
very good - thank you
Thank you too!
Huge amount of free info in this one. Massive effort nice one buddy
Thanks fella, took me a while this one so appreciated
Do you have advice for transferring pension funds to another provider
Thank you for the hard work. I definitely will do more research on the basics.
Should we beware of any investment in the financial markets that is advertised? I can't imagine the City clique telling anybody outside the clique of any investment worth while.
Will be good idea if you do examples with every Thing you explain.
Hi Tom,
Thanks for such an amazing video. I have a question. I built pots with different employers during my career. Now, I have an aption to withdraw from each pot (25% tax free), however, I decided not to do that. Can you tell me how much I will get per month from each pot when I retire? Thanks
One thing I've never been able to get a concrete answer on is the tax due if you have a pot over the lifetime allowance. The gov website is particularly confusing for this with it talking about crystalisations etc! I think the main thing that confuses me is this. Let's imagine the lta was set to 1m to keep it simple and you have 2m pot. If you took the entire 2m in cash do you pay 55% tax on the extra 1m(550k) and get to keep the remaining (450k) or do you have to pay income tax onto on that 450k, which would reduce is down further to just 225k, that seems like an appalling deal?!
I have 10 years of missing national insurance contributions before year 2006 starting year 1991 (what can i do to get them reinstated by paying voluntary contributions as most of those years i was overseas. Pls advise
What if I came to UK and paid my pension contributions for let's say 6-7 years to then move back abroad, will I be able to see the money in some ways when I retire or as a refund beforehand??
So with SIPPs, I can choose the stock I want?
I specifically want a pension plan where I can choose the stock(s) myself. I don’t want to choose an index fund as I already have that vis my pension plan with my company. I want a bit more risk with the hope of compounding for as long as possible (I am 26 at the moment).
Which pension type would be best?
Yep SIPPs you choose what goes in
@@ThatFinanceShow can you do the same with a LISA?
One other question:
I already get the government bonus with my help to buy, can I choose for it to go into a LISA instead? Can I make changes whenever I like? I understand you can’t have the bonus in both at the same time
Another solid video so thumbs up from me, but please calm down with the music and sound effects they don't add anything to the content and are surprisingly irritating.
Ah sorry,
Hope it didn’t ruin it
Getting all professional and serious with the tie on Tom eh? 😂 Nice video. They need to teach these basics (and other financial elements) at school.
I think I prefer the more casual look, feels more approachable. I don’t know if it’s because I never go in offices anymore but shirts and ties are so alien to me now. 😂 Agree on teaching this in schools. Nobody told me anything about credit cards and mortgages at school but somehow trigonometry was important. (Never used it my 20 year career!!) 👀
I know right, even ironed my shirt 😂
@@nrgmn I'm a bit old school I'm afraid. Casual is fine on RUclips, but if I'm paying to see a professional, I like them to look the part. I'm a professional IT consultant and always wear a suit and tie when I visit customers. However I very rarely get to do that these days!
@@simonwl I think it really depends on the job and how people come across. I think if you look smart and presentable then that’s fine. Shirt and jackets are smart. I just don’t like ties on people. Never have. Probably a school thing. Hated them. 😄
I've been teaching it in my school this year. Only one class of 25 kids, but if one of them is more clued up and avoids some financial traps then I've done something good.
Considering retirement or working less in 5 years, especially amidst this financial recession, I'm curious to learn how individuals allocate their income-how much goes into savings, spending, or investments. I earn around $250,000 per year, but my financial portfolio doesn't reflect it yet
Diligently contributing to your retirement or exploring financial planning would be wise.
True! I feel fortunate to have been exposed to money management at an early age. Having worked full-time since I was 19 and purchasing my first home at 28, I find myself at 50 now. Getting laid off in March 2020 turned out to be a blessing in disguise. Consulting an advisor during that period, coupled with subsequent investments, has brought me to a point where I'm only 15% short of $1 million today.
@sandra This is substantial! I'm eager to grow my reserves despite economic challenges. My 401(k) has lost everything accrued since early 2019. At this point, I need guidance. Can you point me in the right direction?
Having worked with several experts, I eventually settled with ‘LORETTA WILKINSON.’ Their recession-proof, profit-oriented strategy is impressive. Basic information about her can likely be found on the internet; she's a renowned advisor.
Thanks for the information! I promptly copied and pasted her full name into my browser and easily found her page. She indeed appears very distinguished.
I am in a DC Pension Scheme. I have recently started putting extra into 'the pot' via standing order from my Bank. I am seeing 'Tax Relief' applied to this ( 20% ). Now, will this extra money be 'added' to the pot or will it sit 'outside' of the main fund? I am 58, Married and have about £194K in fund so far. Split about 60% ( equities ) and about 40% ( Bonds ). When the credit card is paid off I will increase my contribution to £100 per month. Advice please. Mr T
Been working for NHS since 2006 ,I have a pension pot of £80k from previous job . Would I be able to tip my NHS pension into my other pension when I'm 60 and then draw down annually, give up work and not be penalised? Any advice appreciated
@Alex Edwards Thanks , can't get any sense from NHS it's as if they make it as awkward as possible so you take what they tell you.
@Alex Edwards Thank you so much , that's all I needed to know but it's like pulling teeth getting a answer from the NHS 🙂
Great video! I understand advice is awkward but could you teach a little bit about how the pension should get split into the pie chart of funds or pots or whatever the terms are ? I just have no idea if I’m choosing the right split. Overseas markets or consensus etc etc.
Thanks glad it was helpful, it's all about risk and managing it. The more stocks, the higher the risk. I have some videos on here about how much risk you should take etc, have a browse around.
@@ThatFinanceShow thanks for the reply I’ll take a look at your other videos!
Riches country in the world yet we pay pensioner shit the lowest in Europe
Have you done any financial advice videos for freelancers?
Hi Nic, on what topics?
@@ThatFinanceShow To be honest, any topics. Self-assessment is fairly straightforward but at what point should you get a book keeper vs an accountant? (Or just figure it out yourself? How much should you pay for these services and how to find trustworthy ones?) Should you consolidate your workplace pensions if you were PAYE previously and how? Maybe savings accounts that are ideal for lump sums at a time rather than regular payments? Might not be your specialty but software that is known to be decent (and not break the bank) for accounting perhaps. What you can realistically claim for on expenses and how much you can expect to save on your tax bill as a sole trader (not VAT registered) Is it worth having a business bank account (pros and cons). I’m sure there’s other things but these are off the top of my head.
@@nrgmn I’m not a financial advisor, but I am self employed in the UK, so thought I’d chip in.
I went for an accountant (over a book keeper) once my tax bill went over 1k, as the way you pay it then changes, and therefore I needed ongoing advice/resource to be wise with how I spread my costs. It cost me ~£220 + VAT, and as my books have grown larger and more involved it’s now more like £600 + VAT.
To pick an accountant, shop around small to medium sized firms local to you (and with a reasonable tenure) as they are a better bet than larger firms (IMO) for costs and also finding your accountant being more available for queries.
On accounting software- over the last few years they hooked me up with accounting software Xero, which makes account keeping and tax submission to them a doddle. No more spreadsheets, and the computer algorithm recognises what your regular recurring transactions are, so the longer you use it for the quicker it becomes as it learns all the ins and outs of your spending and income. They have back end access and fee for Xero is included in the service.
How much you can expect to save on your tax bill isn’t something I can definitively answer, but I would say they are infinitely more aware of all the things you can claim for (e.g. rent, proportions of mortgage interest, etc). For me it’s the time saving and peace of mind I get knowing a reputable firm handles this admin so I can earn more and do what I’m good at.
Biggest thing I became aware of was the extended basic rate of tax - when you pay into your pension, the government not only tops it up @20%, but they extend your basic rate tax band by however much you and they paid into your pension for that year. So - with planning - you can use your pension contributions to prevent your taxable profit entering the 40% tax bracket.
Hope some of that is helpful, and apologies if any of it is teaching you to suck eggs!
@@markjwgraham7842 Thank you for this Mark. Extremely helpful. I appreciate you taking the time to write this. I’ll certainly look at an accountant as I know things will complicate come the next tax year. I assume that’s a monthly fee for the accountant? Was not aware of the pension contributions. Seems a bit high though? My workplace pension had employer contributions of something like 4%? Why would the Gov give freelancers more? Good to know about the software and accountants being able to see that too. I’ll investigate further. Many thanks again. Lots to think about! Appreciate the honest experience. 👍
@@nrgmn my pleasure Nic!
Re acct fee - that’s yearly, and my accountants are happy to split it into 12 monthly payments by direct debit after the invoice is raised.
Re 20% from government - that’s them giving you tax relief. Employees get the equivalent, just it’s paid into pension pre tax, whereas the government views self employee as paying into pension post tax.
They aren’t matching your salary like employers, that’s a separate thing.
If one were to incorporate their company one could utilise the company to pay yourself as an employee and do pension contribution matching, but if it’s your company you’ll still have to pay for it - it isn’t “free money” to you the way it is if you’re an employee.
Great video!
Glad you enjoyed it
Hi
Thanks for this video
I’m looking for a pension scheme that will allow me to take out my money at the age of 31 …. Please do you know any scheme like this?
Not possible I’m afriad
@@ThatFinanceShow okay thanks for getting back to me! Top legend! Thanks
Tom, I'm confused with the Contracred Out rules.
I received a letter in 2008 saying that I needn't pay any more NI contributions as I had been paying for 35 years and would receive the full state pension when the time came, so I stopped.
When the time came, I found that I was on a reduced pension sum because as an ex serviceman, the RAF had apparently been underpaying my NI contributions.
I had been told in 2008 that I would qualify for a full state pension, when in fact I don't. What can I do to receive a full pension please?
Hi Tom, huge thanks, with only months to go my pensions are very much in focus & having never given pensions more than 5 minutes in my working life I'd be lying if I said I wasn't just a little overwhelmed.. I will watch this video over & over again until the muddy water clears a little. Thank You Sir !! (EDIT : Help : you've mentioned 'seek financial advice' a number of times, is there really anyone out there that wont have their own commission/wallet as their ultimate priority over my survival ??? any words of wisdom appreciated)
You’re very welcome. Ask friends and family for personal recommendations
I wonder if this includes people who have only taken 25% tax free of there pension does not make a clear distinction
Why has UK started outsourcing pensions to other countries? Isnt it risky that our data is handled by third party who has no idea about UK pensions, tax structures, legislation, etc. Furthermore, they have the pensioners complete data.
Cant this be done something here in UK. Or people have started showing off interest towards administering UK pensions?
Here’s a question for anyone who has the relevant knowledge …is it currently possible (in the UK) to transfer a DB pension into a Sipp (yes I know it’s considered risky) as I have recently been led to believe that it’s becoming extremely difficult to do this of not virtually impossible …however I feel that to take your entire pot and have it invested as drawdown is an interesting option which could be more lucrative than taking a potentially much lower ‘whole of life’ defined pension…🤔
Yes you can but for most people it’s not suitable
@@ThatFinanceShow I agree…Horses for courses. Further to this if one had a DB pension on actual retirement (not particularly at state pension age) how would one go about utilising it as a Drawdown?
Thank you for the reply and the wonderful content of your channel 👌
Hi,
I've just discovered your channel yesterday and I'm finding it so useful already, I usually find these topics so confusing (especially as a EU citizen living in the UK)!
I understand we went through all the private pension options, but where does the state pension fit into this? I'd love a video about how it works, opting out, etc.
Hi glad videos are useful, state pensions are seperate entirely, all based around your national insurance record.
You can get a good projection on the gov website. I will definitely do a video on this at some point
@@ThatFinanceShow thanks so much!
How does one go about reclaiming tax for pension money from HMRC? I’ve got a login but I cannot see anything.
Self assessment
I wonder if the means-tested pension is ever introduced. What will happen to people who paid NI contributions all their life? One solution could be to give the option to choose: to give up your state pension and keep your private pension tax-free.
Interesting, who knows. One thing I am certain of though is that it will have to change somehow...
@@ThatFinanceShow why does it have to change ? Should people be penalised for having a private pension and paying towards a state pension all their lives ? The trouble is this government think it is giving you a benefit even though you have paid into it 40+ years. Labour would be worse they want to look after people who have never contributed and have only just arrived here .
I PREFER S&S ISA's INSTEAD OF PENSIONS.. PENSIONS ARE JUST DEFERRED TAX PAYABLE & TOO LATE TO DO ANYTHING ABOUT IT, ISA's ARE TAX FREE START TO FINISH.. CAN ANYONE CONVINCE ME OTHERWISE ? 😊
Tax relief on the way in can be seriously powerful compounded over time, they are a great tool used in conjunction with a S&S ISA
@@jiwachhetri9262 This issue has always put me off Pensions, I'd like to add that one doesn't know as & when the Govt of the day like LABOUR did in the past will just raid the pensions AGAIN as an easy target !! I'm sticking with ISA's for as long as they last for control !! Long term view, I have decided not to stay in the UK, I refuse to keep paying into a failed system where hardworkers are seen as idiots & cash cows to pay benefits yo the useless sicknote brits, not happening !!
I’m self employed and just started investing on trading 212 s&p 500 and ftse all world. Do i still need a pension?
Awesome content.
I have finally gained access to my pension account and can now review its details. I wanted to seek your advice regarding whether I should pay for all the shortfalls or just a few specific years that I have missed. I have attempted to contact the future pension center for guidance, but unfortunately, it has been difficult to reach them and obtain any advice. Therefore, I am reaching out to you in search of expert advice.
So far I've got 4 years of full contributions, 11 years I did not contribute enough, so I've got 28 years to contribute before 5 April 2051
Should I make up the payment shortfalls in full or are there other considerations to take into account?
I greatly appreciate any guidance you can provide on this matter. Thank you for your assistance.
Hello, thank you for your video it was highly informative!!
Would you advise keeping different pension pots or getting them consolidated?
Also, are SIPP really a good idea? I have heard loads of people talking about it online but I’ve never met any in the flesh (very much like cryptocurrency investors 😂)
It's not a benefit if you have worked to pay for it your whole working life.
Absolutely correct Sir . Its disgracefull it's called such
I'm so happy I made productive decisions about my finances that changed my life forever. I'm a single mother living in Canada, bought my second house in September and hoping to retire next year at 49 if things keep going smoothly for me
Your right Ma'am investing is easier with proper guidance, especially from a professional, it really helps to reduce the chances of incurring losses.
Thanks for your profile response, can you tie me up with your financial consultant
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