Q&A about how to take control of your finances with Heather McGregor - ANSWERS BACK

[LucilleMumsnet]

To celebrate the release of Mrs Moneypenny's Financial Advice for Women on 24 April, this week we are running a Q&A about taking control of your finances in order to achieve your goals with Heather McGregor.

Heather McGregor owns and runs Taylor Bennett, the executive search firm. She is a committed philanthropist in the area of employability and social mobility, having founded the Taylor Bennett Foundation in 2008, and is currently the chair of Career Academies Foundation.

Mrs Moneypenny's Financial Advice for Women is an essential and punchy guide where the hilarious and wise Mrs Moneypenny will show you how to set your own financial finish line, and then how to go about reaching it. From increasing your income to cutting your bills, from starting a business to saving a pension, she gives practical, easy ways to think about your money and take control of your life.

For over 14 years Mrs Moneypenny has been entertaining readers of the Financial Times with her weekly column. She presented the Channel 4 series Superscrimpers, and is the author of Mrs Moneypenny's Careers Advice for Ambitious Women.

Post your questions to Heather before 9am on Monday 28 April and we'll send over a selection and post up the answers on 6 May.

[nicename]

What is the best way to save for a pension when you have had career gaps and/or have no company pension?

I have some (3) company pensions from past employers running but now work where I am earning far lower than before and do not have any pension provided.

[TwelveLeggedWalk]

Another pension question - what's the best way to save for a pension when you're self employed and your income varies?

[BeCool]

I'm so mixed up about pensions. I don't have one and am unlikely to get one via my employer ( only 2 employees). I am a single parent.

Also all my life I heard such negative things about them being wiped out, unreliable etc.

But I am now 47 and I guess I need one. But I'm just fixed in a place of confusion and terror. A friend suggested ISA's are better than pensions, but if I ever had to reply on benefits (I hope not but I have 2 young DC so need to consider options), then the ISA's would have to be spent before I was entitled to any state support. For that reason I don't see ISA's as a viable alternative.

Any advice?

[Ledkr]

Dh and I both have public service pensions which to get in full we will have to work until our late sixties now.
We have an 12 year age ago though so by the time he's 67 I'll be nearly 80 so we would like to both retire early to enjoy some time together.
We have a house with plenty of equity so will sell in a few years and hopefully buy a house mortgage free, should we invest some of the money and if so how?

[AdoraBell]

What is the best way to ensure my daughters, currently aged 12, can save for a pension while we live abroad? Are there financial vehicles we could be paying into on their behalf?

[RubySparks]

Similar to Ledkr, there is an 11 year age gap between me and DH but I am affected beanie to age women can retire, Im now looking at 66 for state pension and he will be 77. How can we plan for retirement with this gap? He will probably retire in 5 years if ill health doesn't hasten this but I can't really retire for another 16/17 years...

[LucilleMumsnet]

Thank you to everyone who posted their questions to Heather, we now have the answers back and will be posting them up shortly.

[HeatherMcGregor]

@nicename

What is the best way to save for a pension when you have had career gaps and/or have no company pension?

I have some (3) company pensions from past employers running but now work where I am earning far lower than before and do not have any pension provided.

First of all, ask someone (your local bank could do this, or find a financial advisor on www.unbiased.co.uk/) to help you work out what your current pensions will pay out in total at your desired retirement age. Then you will be able to see what you would have to save now in order to bridge the gap. Saving for a pension when you are not earning much money may seem like a big sacrifice, but remember that roughly for every 80p you save the government will add 20p, and the earlier you save the more that money can grow.

[HeatherMcGregor]

@TwelveLeggedWalk

Another pension question - what's the best way to save for a pension when you're self employed and your income varies?

In your case, I would start a pension and put money in once a year. I would advise that every time you are paid, put some money – ideally 20% - aside for tax into a savings account. Then, at the end of January every year when you pay your tax you will hopefully have some left over and you should put this plus anything else you can afford as a lump sum into a pension. And the government will put some in too!

[HeatherMcGregor]

@BeCool

I'm so mixed up about pensions. I don't have one and am unlikely to get one via my employer ( only 2 employees). I am a single parent.

Also all my life I heard such negative things about them being wiped out, unreliable etc.

But I am now 47 and I guess I need one. But I'm just fixed in a place of confusion and terror. A friend suggested ISA's are better than pensions, but if I ever had to reply on benefits (I hope not but I have 2 young DC so need to consider options), then the ISA's would have to be spent before I was entitled to any state support. For that reason I don't see ISA's as a viable alternative.

Any advice?

One reason why some people preferred ISAs to pensions is that, until very recently, everyone had to convert their pensions into annuities when they were 75. These were effectively income streams covered by insurance policies that paid out until you died and that was the end of that; ISAs pay out until they run out or you die, but if there is any money left over when you die it will be inherited by your beneficiaries. In the Budget this year George Osborne announced the end of the requirement to buy an annuity at 75, so now I think more people will be indifferent between savings and pensions.

One of the main advantages of saving into a pension is that the government will add to it every time you do. One of the main disadvantages is that you can’t access the money before you retire. You will have to make the decision, but remember that the government contributions (effectively the tax that you have paid refunded to you) is money you won’t get unless you save into a pension.

[HeatherMcGregor]

@Ledkr

Dh and I both have public service pensions which to get in full we will have to work until our late sixties now.
We have an 12 year age ago though so by the time he's 67 I'll be nearly 80 so we would like to both retire early to enjoy some time together.
We have a house with plenty of equity so will sell in a few years and hopefully buy a house mortgage free, should we invest some of the money and if so how?

When you retire and sell your house you should seek professional advice about how to invest the money. Look for a financial advisor on //www.unbiased.co.uk and work with them to establish what level of income you will get from your pensions and how much you need to supplement it by, and that will tell you the amount of money you should invest and how.

The key thing is that I would get this advice now – not in a few years when you sell the house and retire – because then you know what your options are and how much you can afford to spend on the next house and still have enough to spare. This in turn will inform your decision about when to retire.

Financial advisors make their money partly from commissions when you make investments through them, so look for someone you can pay by the hour as you are looking for advice and not yet planning to make any investments.

[HeatherMcGregor]

@AdoraBell

What is the best way to ensure my daughters, currently aged 12, can save for a pension while we live abroad? Are there financial vehicles we could be paying into on their behalf?

Yes, there are pensions for children. You can start a pension for a child any time from birth. Each child can contribute (or have contributed on their behalf) a maximum of £3,600 a year, or £300 a month, to pensions until they are 18. The government automatically pays 20% so a £3,600 contribution only costs you £2,880. As you live abroad this may not apply to you, but you can easily check with your UK bank.

[HeatherMcGregor]

@RubySparks

Similar to Ledkr, there is an 11 year age gap between me and DH but I am affected beanie to age women can retire, Im now looking at 66 for state pension and he will be 77. How can we plan for retirement with this gap? He will probably retire in 5 years if ill health doesn't hasten this but I can't really retire for another 16/17 years...

This is another example of where I would advocate early planning. You might consider working part time after he retires, or adjusting your job in some other way to make sure you get more time with him without giving up work entirely. Even if you work part time you are allowed to top up your national insurance payments which means that you could still claim the full state pension when you do eventually retire. Look at this link for more detail www.hmrc.gov.uk/ni/volcontr/toppingup.htm

[HeatherMcGregor]

@rainbowqueen

What's the best way for women to get into work if they already have children? Childcare is prohibitively expensive for those on entry level salaries.

I agree, this is a chicken and egg situation, you can’t get a job without childcare, and you can’t afford childcare unless you have a (good) job. There is government help available, though, for people on lower salaries, and remarkably few people take it up. If you or your partner work at least 16 hours a week you can get up to 70% of your childcare costs, up to a maximum of £175 a week for 1 child and £300 a week for 2 or more children. More information at www.gov.uk/help-with-childcare-costs/childcare-tax-credits.