Wealth Check: 'How do I keep saving when I have so many pensions?'

Kenneth Knowles lives and works in Edinburgh.

Kenneth Knowles lives and works in Edinburgh. A few years ago, he started a pension with his first employer but discovered he couldn't move it when he changed jobs. However, after beginning a second plan with a new employer, he was made redundant and has not paid anything into a pension for a year and a half.

Kenneth is now working full time with his current employer, which makes him eligible for its company pension scheme. He would like advice on whether to start another pension with this firm or to look at moving his existing plans, and also how much of his salary to pay into a scheme. Moreover, he needs advice on whether or not to opt back in to the state pension. Finally, Kenneth says that his surplus income always disappears and he is keen to start saving more consistently.

We put Kenneth's case to Jonathan Fry at Jonathan Fry & Co, Robert Lockie at Bloomsbury Financial Planning and Alan Adam at Alan Steel Asset Management.


Salary: A surplus of about £500-£600 a month. Not a higher-rate tax payer.

Property: Owns his flat outright so pays no mortgage or rent.

Debt: £3,000 remaining on student loan, £500 overdraft.

Pension: Two job changes have left Kenneth with two pensions and the offer of a third.

Monthly outgoings: £1,100, not including food, socialising and miscellaneous items.


Robert Lockie says that an overdraft is an expensive way to borrow, and Kenneth shouldn't need to do this if he has surplus income. His first step should be to establish a fund of easily accessible cash that can be used to meet emergencies.

Although Lockie would usually advise people to pay off debt as quickly as possible, student loans are an exception. The rate of interest is pegged to inflation so this is a cheap form of borrowing.


Alan Adam advises Kenneth to have a transfer analysis carried out on his existing pensions, to see if the money would be better left where it is. If the best bet is to transfer it, the next question becomes whether or not he transfers his savings into a private pension, or to his new employer's scheme.

Adam says Kenneth should simply pay as much into his pension as he can afford, aiming for about 10 per cent of his earnings at his age. Contracting back into the second state pension, which used to be known as Serps, is something nearly everybody should be doing now, Adam adds. The National Insurance rebates the Government pays to private pensions are outweighed by the estimated benefits from the state.

If there is an employer contribution to the new pension, Jonathan Fry says that Kenneth is very likely to be better off joining the scheme. Fry recommends www.pensioncalculator.org as a good way for Kenneth to estimate of how much he needs to be contributing to his pensions to reach his target retirement income. As a rough guide, the overall percentage, including any contribution from an employer, needs to be a minimum of half his current age.

Lockie warns that whether to be contracted in or out of the second state pension is a complex decision. As well as the National Insurance rebates on offer, your age, attitude to investment risk and the costs of the private scheme that you would use instead are all important. Rebates may change in the future. There is a useful fact sheet on the subject on the Association of British Insurer's website ( www.abi.org.uk).


Fry says that for regular, long-term savings, Kenneth needs to use his individual savings account (ISA) allowance - a mini version of the plan, if he is saving less than £3,000 a year.

A broadly based fund, such as Jupiter Merlin Growth Portfolio or the New Star Fund of Funds, might be a good place to start. But Kenneth should only consider this if he is willing to accept that the value of his investments may rise and fall.

Adam agrees. Over the longer term, shares have tended to provide a more effective hedge against inflation than any other asset class, he points out. He reckons Kenneth could also save about £200 a month into a mini cash ISA for tax-free, accessible capital, as well as £150 a month into a mini stocks and shares ISA.

Lockie reckons that, with his lack of housing costs, Kenneth is in a better position than many, especially with surplus income of up to £600 a month. Even so, it still makes sense for him to set a sustainable budget, with regular savings made by standing order straight from his bank account.

* For a free financial check-up, write to Wealth Check, The Independent, 191 Marsh Wall, London E14 9RS, or e-mail cash@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

peopleFrankie Boyle responds to referendum result in characteristically offensive style
Life and Style
Couples have been having sex less in 2014, according to a new survey
New Articles
i100... with this review
Holly's review of Peterborough's Pizza Express quickly went viral on social media
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
Blahnik says: 'I think I understand the English more than they do themselves'
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Senior BA - Motor and Home Insurance

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Market Risk & Control Manager

    Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam