Cheap pension providers for smaller contributions?

JustAnotherSaver · 8 October 2017 at 10:16AM

* Just to kick start this thread with basic rate taxpayers and likely always will be. So now that we don't need to really consider higher rate tax relief....

I thought i had a few pages bookmarked from when i looked into this for myself but i either didn't or i must've deleted them as i can't find the pages now.

I personally went with Cavendish Online because they were the cheapest, they offered the funds i were looking at & importantly ... i could afford their minimum of £200 per month and i'm sure i'll be able to for the foreseeable.

Just making this thread on behalf of 2 people, one of which certainly wont be able to hit Cavendish's £200pm requirement, the other maybe could but it'd be stretching and not worth it, plus there'll certainly be months where they can't & it's just better if they can comfortably meet any minimum requirement.

Right now they're investing in the form of a S&S ISA into Vanguard funds. One has a pot of around £11k & the other around £4k. They're both unsure whether to bring those pots over to the pension & have their retirement plan all in the form of a pension or whether to leave that money where it is in the form of a S&S ISA but any future contributions would go in to a pension.

Both are currently with Haregeaves Lansdown but i understand this is certainly not the cheapest and neither feel any loyalty towards HL (as in they'd be happy to move wherever is best for their money).

From talking to them about it both are leaning towards sending their pots over into a pension & having the whole lot in pension format but if there's a good reason not to do that then please post your view.

Regardless, whether they start a pension today from £0 or whether they start from their current pot size, both will be looking to contribute between the £100-£200pm bracket so where really should they be looking?

Thanks.

cloud_dog · 8 October 2017 at 11:28AM

JustAnotherSaver wrote: »

Just making this thread on behalf of 2 people, one of which certainly wont be able to hit Cavendish's £200pm requirement, the other maybe could but it'd be stretching and not worth it, plus there'll certainly be months where they can't & it's just better if they can comfortably meet any minimum requirement.

Right now they're investing in the form of a S&S ISA into Vanguard funds. One has a pot of around £11k & the other around £4k. They're both unsure whether to bring those pots over to the pension & have their retirement plan all in the form of a pension or whether to leave that money where it is in the form of a S&S ISA but any future contributions would go in to a pension.

Both are currently with Haregeaves Lansdown but i understand this is certainly not the cheapest and neither feel any loyalty towards HL (as in they'd be happy to move wherever is best for their money).

From talking to them about it both are leaning towards sending their pots over into a pension & having the whole lot in pension format but if there's a good reason not to do that then please post

two things....

1) The expensive aspect of HL is relative, insofar as, if you only have a small pot then the charges will be relatively small. If the pot increases in size to a 'tipping' point (individual's own consideration) then move from HL

2) If they are of the mind that their current pot(s) are 'assigned' as pension provision/money, why not just transfer the capital amounts in to a cheap pension/SIPP.

2.1) If the minimum monthly contribution rule is a problem then
continue with their 'comfortable' regular investment option in to their ISA account(s) and periodically (once a year?) transfer the capital in to their pension/SIPP (ensure they don't fall foul of any ISA account rules).

xylophone · 8 October 2017 at 11:55AM

Cavendish still offer the stakeholder.

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/aviva/

But for modest pots, HL might still be an option.

TheShape · 8 October 2017 at 1:03PM

I started my HL SIPP with a gross contribution of just £25 p/m, so just £20 p/m contribution from myself. Lump sums payments can be made from £100 gross (£80).

The monthly contribution can be adjusted to suit at almost any time.

JustAnotherSaver · 8 October 2017 at 1:52PM

cloud_dog wrote: »

1) The expensive aspect of HL is relative, insofar as, if you only have a small pot then the charges will be relatively small. If the pot increases in size to a 'tipping' point (individual's own consideration) then move from HL

0.45% is 0.45% though. Whether it is of £1k, £10k or £100k.

I appreciate that 0.45% of £1k isn't a great amount & even moreso when compared to 0.45% of 100k, but regardless, the percentage is still the percentage so why pay X for Y when you can still buy that exact same Y and only pay Z instead?

Furthermore - they don't actually have pensions right now so it's not as though they'd be moving from one pension provider to another, they're in a way starting afresh.

Also with the money being where it currently is in the form of a S&S ISA, £10k in is £10k. The point here is there is no tax relief to compound year on year which is just another reason they are leaning towards a pension over a S&S ISA.

I understand there is the LISA which i guess brings the difference down a bit (25% for the LISA vs tax relief for the pension) but i've gone through the LISA with both of them as an option and they've opened one with the minimum opener in case circumstances and opinions change in future but neither of them at this moment in time want to really use the LISA.

As a rough number cruncher, the one with £11k it has taken them around 5 years to get that far, maybe 6. So that's 5 or 6 years at 0.45% the charge. If somewhere is offering the exact same funds to invest in at say 0.25% charge or 0.30% charge then surely that's better?

xylophone · 8 October 2017 at 2:05PM

How much (current tax year) relevant earnings does each have?
Are they in work related pension schemes?
How old are they?
Have they each obtained state pension statements?

JustAnotherSaver · 8 October 2017 at 2:18PM

xylophone wrote: »

How much (current tax year) relevant earnings does each have?

Their last years earnings (P60) he was about £27k with this year likely to be somewhere similar whereas she didn't earn enough to pay tax because she was working scattered days, however since September '17 she has been able to secure a full time (Monday-Friday) contract so that will change significantly to where instead of earning say £500net per month she'll be maybe £1000-£1100 net per month. We're waiting on the first payslip though.

Are they in work related pension schemes?

Yes for both but there are no employer benefits from extra contributions.
He's with NOW Pensions, she's with NEST. Regardless of how much extra they pay in their employers will only ever pay in the minimum that they have to and salary sacrifice is not an option for either.

Apologies if you're not going down that road i'm just throwing extra information out in case that's where you were thinking.

How old are they?

He's just turned 25, she'll be 27 early next year

Have they each obtained state pension statements?

Neither has.

EDIT: In case we drift off to the land of house purchasing, it's all guessing. He's currently single & after the last episode he's probably traumatised for life. She's got a boyfriend of a year or so. They may buy at some point they may not. Currently they may more likely rent but it's all guesswork. He is paying the maximum per month into a HTB ISA (£200 with Halifax) whereas she's been paying in approx £50pm so far. They may use it to go towards a house purchase but may not as they may end up renting.

Whereas I always knew i was going to buy & had saved just over £40k by the time i bought when i was 30 (on around £15k-£18k per year) they are not driven the same way i was.

Again this is just assuming we may drift off topic to talk about house purchasing. Apologies if we weren't going to.

greatkingrat · 8 October 2017 at 3:00PM

JustAnotherSaver wrote: »

I personally went with Cavendish Online because they were the cheapest, they offered the funds i were looking at & importantly ... i could afford their minimum of £200 per month and i'm sure i'll be able to for the foreseeable.

Just making this thread on behalf of 2 people, one of which certainly wont be able to hit Cavendish's £200pm requirement, the other maybe could but it'd be stretching and not worth it, plus there'll certainly be months where they can't & it's just better if they can comfortably meet any minimum requirement.

Where did you get the £200pm minimum contribution from? According to their website, the minimum contribution is £50 gross (£40 net)

https://www.cavendishonline.co.uk/pensions/charges

JustAnotherSaver · 8 October 2017 at 3:25PM

greatkingrat wrote: »

Where did you get the £200pm minimum contribution from? According to their website, the minimum contribution is £50 gross (£40 net)

https://www.cavendishonline.co.uk/pensions/charges

I saw it somewhere on their website when i was sorting out my own but i can't seem to find it. I don't find their website the easiest to navigate around.

Now i'm sure to that there'll be plenty who'll say they have absolutely zero issue with their website & that's fine but i personally don't think it's the easiest.

Anyway i went through old emails because i know i saw it somewhere on their website & found an email response from June this year...

The minimum investment of £200 a month applies to the Fundsupermarket Pension (SIPP) for ISA investments the minimum investment is £50 a month.

Full details of how to set up the ISA can be found on our website at https://www.cavendishonline.co.uk/investments/buy/

So they're saying that there's a minimum of £200pm for a SIPP where the minimum for ISAs is £50pm.

I just can't find where it says that on their website any more but i know i saw it in order for me to email them about it & for them to then respond on it.

I do remember the minimum being £200pm for direct debit contributions or £1000 as lump sum contributions. I just can't remember whether this was for a SIPP or a S&S ISA or both.

JustAnotherSaver · 8 October 2017 at 8:46PM

I've spent a good bit of time today looking for that £200 requirement i mentioned which you said you can't find & i just cannot find it.

The only thing i can think of is they've relaxed the requirements since i emailed them in June. They must surely have had it because i quoted their actual response to me - which clearly doesn't say anything on the lines of "we don't know what you're on about with that £200 you speak of", they actually acknowledge it.

Does anyone know if/when they changed this? Has anyone been able to find it on the website?

I may just get in touch with them to check because it's bugging me. I know for 100% sure i've seen £200 minimum mentioned on their site right before i signed up. What i'm not 100% on is whether that was for a SIPP or a S&S ISA (because i signed up with a SIPP and my wife a S&S ISA) but i know i certainly saw £200 minimum mentioned.

xylophone · 8 October 2017 at 9:01PM

Even without any extra employer contribution they will get tax relief on any additional contributions that they make.

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/memberhelpcentre/contents/how-can-i-make-additional-contributions.html

https://www.nowpensions.com/help-centre/faqs/contributions/can-an-employee-pay-more-in-to-the-pension-pot-than-the-employer

Cheap pension providers for smaller contributions?

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