At 16, I worked six years as a hairdresser but can’t find my pension. Where is it?

In our Pensions Crisis Coach series, we aim to help ease your retirement worries. Are you concerned you’re not saving enough for your later years, or don’t know how to find your lost pensions? Email us at money@theipaper.com. We’ll seek to get you on the right track with help from some of the best financial experts and advisers in the business.

Ellie writes: I am 25 and have worked since I left school at 16 as a hairdresser. Before I became self-employed in 2023, I was full-time employed at a hair salon, but I have no idea who my pension provider was and what is in my pension. I think I contributed to the pension from 2019 until 2022. I am now self-employed and haven’t set up a new private pension; it’s one of my goals for the year. I just have no idea where to start.

I’m worried that I’ll be contributing too late and I won’t have enough, so I’m planning on looking into investing as well to help, but I’m also not sure where to begin?

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Alina Khan, The i paper’s money coach reporter, responds: After reading your email, the first thing we need to work out is who your pension provider was when you were full-time employed at the salon.

After our back and forth on email and contacting your old salon, we’ve found that their provider was NOW:Pensions.

They said they did not have any record of you on file and after following up with you, we worked out that you were not actually contributing to the pension when you were there.

You left the salon at 22, which is the age at which your employer has to enrol you in its workplace pension automatically.

Although finding this out may have been disappointing, you are still very young, so there’s plenty of time to save into a pension before you retire.

The second question you ask is about setting up a pension as a self-employed person. Most people do this via something called a self-invested personal pension, or SIPP.

Like with workplace pensions, when you pay into a SIPP, you will get tax relief on your contributions. This means if you’re a basic rate taxpayer earning under £50,270, £80 of contributions are topped up to £100.

Mary Green, an independent financial adviser at Rosewood Financial Planning, said there were a few things you needed to consider when choosing a pension provider.

These include how easy online setup is, the cost – including fees – straightforward investment options and good reviews.

In terms of how much you should put into the pension, Green says: “Consistency and affordability are key as the time invested is one of the most powerful factors in growing a healthy pension pot. A rule of thumb which is sometimes used is 15 per cent of your earnings.”

In terms of where to put your cash, Green says that “a good basic investment strategy would be to consider well-performing low-cost index tracking funds.”

Low-cost index tracking funds replicate the performance of a specific stock market by closely tracking its performance, often by simply investing in every stock in the index they’re tracking.

The funds are typically passively managed, meaning they do not actively pick what stocks to invest in.

As a final tip, Green says to be aware of national insurance contributions as a self-employed person, as this can impact your eligibility for the state pension.

If you are self-employed, the amount of national insurance (NI) contributions you make depends on your profits, but you need to make sure you have enough qualifying contributions each year.

You need 35 qualifying years of NI contributions to receive the full new state pension and you need to have at least 10 years of contributions to receive any State Pension at all.

If you don’t have enough, you can later pay to fill the gaps.

Green added: “It is also worth noting that you should, if possible, pay your NI contributions even if you are under the profit threshold [at which you have to pay them as a self-employed person].”

You mention you want to start investing as well.

When you put money into a pension, you are essentially investing. Your money will likely go into any, or a mixture of, bonds, government debt, equities, shares in companies and potentially cash too.

With pension investing, though, you can’t access your money until you hit a certain age, which will soon be 57, but could rise in the future.

If you want to access investment cash earlier, there are other avenues.

The easiest one is a stocks and shares ISA. This allows you to invest cash – £20,000 a year – and avoid paying any tax on the gains you make.

There is also a Lifetime ISA (LISA), which can be great for saving for your first home.

You can contribute up to £4,000 per annum and receive a 25 per cent top-up, so £1,000 in this case.

This type of ISA is only accessible for house purchases or to use in retirement; otherwise, you will face a 25 per cent penalty – essentially losing the government top-up, plus some extra money as well.

If you are using the LISA to buy your first home, there are some criteria you have to meet. The property cannot cost more than £450,000 and you need to have contributed to the ISA for a full 12 months.

Best of luck on your retirement savings journey. It looks like you are on track and asking all the right questions.