Taking care of the Family Nest Egg


It’s funny how as young adults we don’t often tend to put a whole lot of thought into the future. However, that all changes as soon as we start raising families, and the list of things to worry about suddenly becomes endless! Nevertheless, in these times of great economic uncertainty in a dangerous world, securing the household finances is pretty close to the top of the list of priorities. How can you take care of your family nest egg?

One thing I always used to think was a discussion just for the elderly, but no longer do, is that of pensions. I found it a bit scary to discover that as many as one in seven people retire with no personal pension. For women, this figure increases sharply to one in five. There is of course the basic state pension to help, but even at the maximum of around £120 a week, it isn’t really enough on it’s own.

taking care of the family nest egg

Auto enrolment

Partly in recognition of the problems with peoples long-term savings, the Government has introduced a new law which comes into effect next April, whereby every employer in the UK must put staff into a pension scheme and contribute towards it. It does require you to contribute towards the scheme too, and/or sacrifice your salary, but in doing so you are essentially benefiting from free money, a tax efficiency on your wages and the comfort of knowing that you are taking yours and your family’s long-term financial future into your own hands.

There is an opt out, and for some individuals an auto-enrolment scheme may not be the best way to go. However, for most people, it will probably be a no brainer to take part.

The great pension shakeup

One of the reasons people have been sceptical of pensions was that they were previously converted into an annuity upon retirement, which is an agreed fixed income for the rest of your life. The problem with these were that annuity rates have tumbled in recent years, thus condemning pensioners to poor incomes from their hard-saved money.

However, in April last year, this all changed as new regulations came out which meant that pensioners could withdraw from their pensions as much as they wanted from the age of 55, with the first 25 per cent being tax free. Thereafter, each withdrawal is taxed at the person’s marginal rate, but importantly there is no obligation to put it into an annuity.

The key, of course, is to be disciplined with spending thereafter, and find good places to house this nest egg. Some retirees have started using their pension rather like a bank account, while others have turned to investing it. However, investing is obviously fraught with risk. A good middle ground in terms of risk and reward that’s emerged is peer-to-peer lending, which, as the name implies, means you lend directly to individuals via an online platform. Courtesy of the repayments from borrowers, returns are typically in the region of 5 or 6 per cent – but this is not guaranteed.

Lifetime ISAs

Of course, these are all decisions for down the line, and the objective for now is to find the best way to save. Another intriguing alternative is the Lifetime ISA, which is also going live next April. This new account will be available to those between the ages of 18 and 50, and entails a bonus scheme whereby for every £4 you save, Government will top you up with £1. The maximum you can contribute each year is £4,000 which means that, for those a bit younger than me, you could theoretically benefit from ‘free money’ of up to £32,000 over a 32-year period.

You may decide that this is a more preferable option to a pension, especially given that withdrawals are free of tax if you wait until the age of 60. However, the counter to that of course is that pensions offer a tax efficiency on your original salary itself, whereas a Lifetime ISA doesn’t.

Deciding what to do

Decisions like these are entirely personal, and there is no single ‘right’ way to go. But it’s an important discussion for any parent and family to have, so best to face up to it sooner rather than later. There are also numerous Government-approved advisories which offer free advice, and can help point you in the direction.

So it need not be a daunting exercise. The fact that there are multiple options out there is a good thing, and schemes like these are here to help you take care of your family nest egg – it’s just a case of finding one that works best for you, and saving as much as you can to get the most out of it.

What do you think of these options?


  1. I am very lucky that both my previous employers had a compulsory pension scheme and I regularly topped them up too – I am not sure how this will affect me as self employed
    Kara Guppy recently posted…Can you identify the Children’s Celebrity Drawings?My Profile

  2. Great post with loads of really useful info about this subject – thanks for making it so easy to understand

  3. Longer term savings are something I’ve recently been thinking of so this is really useful to me! I opted out my NHS pension when I was younger but think I’ll be re-joining it again soon.
    Saving when the kids are young and you need every penny is so hard though isn’t it.

  4. I’m lucky in that I have a pension from a previous job but sadly due to ill health I was let go from that employment and although I paid in to this pension by making additional contributions I only worked for the company for 10 years. I’m putting money aside now which I hope will assist with my retirement
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  5. I have an old NHS pension but since I became self employed I also put into a private pension. It is so important to save for you old age.
    Mellissa Williams recently posted…Win With English Provender Co. Ends 31/05My Profile

  6. Thinking about the future always stresses me out! I’ve never paid into a pension as I’ve still not left uni (it’s almost 10 years since I started). It’s very important to save though, I’d hate to work hard my whole life, only to live in poverty later on…
    Elanor recently posted…Bonus Time With Clinique And House Of FraserMy Profile

  7. So many options, and lots to think about for sure. Must really start deciding on a pension soon.

  8. I’ve got a pension from a previous job — but I’m sure that will be worth tuppence by the time I need it! I’ve had a limited company for the last 7 years and started saving into an ISA each month, but haven’t had too much to save since having the twins.

    This is all food for thought Kaz — thanks so much for sharing!
    Caro | The Twinkle Diaries recently posted…A weekend with the girls {Montcalm Shoreditch London Tech City}My Profile

  9. This is such a good and important post. I’m useless at saving, but I’m determined to get some savings down for when I’m older and may need it. I also contribute to my pension and so does my employer, but I only make the minimum payment so it probably won’t go that far.

  10. I feel so unprepared when it comes to money! Thankfully I am paying into a pension at work!

    Corinne x
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  11. This has give me much to think about. I am rubbish at saving money but I hope to teach my children to be better than me.

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