What is the best option

Holeypockets

Forgive me if I appear to be taking the lazy route, but there is simply too much information and figures to digest for me to make an informed decision myself. What I want to know is what is the best option for retirement planning for my wife.. She is 40 something now and currently paying £55 per month to a private pension (Scottish Widows). Being that the SW pension was sold to us by Lloyds/TSB I very much doubt it is the best option and I reckon we are probably being ripped off. I have a good company pension which I am sticking with, my wife is self-employed and needs decent cover. In the true moneysavingexpert tradition I want the best for my money. I would also like to know how to go about moving the funds from one pension pot into another. Any help is greatly appreciated.

EdInvestor

Hi holeypockets

First you need to check what charges you are paying with the SW pension. Then you need to check what funds it is invested in and what others are available, with a view to making sure the money is invested optimally.

If the charges are high and can't be cut and there are no good alternative funds, it may be worth considering a transfer.

Is the money in the With profits fund, and if so, is there an MVA exit penalty to switch to another fund? If there is, how high is it?

With the best will in the world, 55 quid a month is not going to produce a terribly big pension, regardless of how good the fund is.

But given that she has no employer's contribution to her pension, she may be best investing additional retirement money via a stocks and shares ISA rather than in her pension, as these are more flexible.

cheerfulcat

Hi, holeypockets,

If your wife would be comfortable picking her own funds/individual shares, she could consider a SIPP ( self invested personal pension ). You can set up a SIPP through a broker such as Hargreaves Lansdown http://www.hargreaveslansdown.co.uk/SIPP/ or Squaregain http://focus.squaregain.co.uk/en/ourservices/ouraccounts/SIPP/index.html.

Moving the pension to another provider is fairly simple; phone or write to the new provider to request a transfer form; they'll do the rest.

And I would echo Edinvestor's thought; £55 a month is going to produce a *tiny* pension. For her own sake, your wife needs to save more.

dunstonh

Scottish Widows pensions are not the cheapest. However, a full scottish widows pension will offer a very very good fund range. The LTSB Scottish Widows badged version is not as good as the full one. You are not being ripped off though.

I have set up two scottish widows single premium pensions this week. A number could have been cheaper but the fund range available through SW was far more desirable for those particular clients. Saving 0.1-0-4% p.a. and sticking it in a duff fund is pointless. I would rather have a decent fund spread that costs upto 0.5% more than default as that offers far more potential.

With smaller funds, the stakeholder or modern PPP should be cheaper than a SIPP although the SIPP does offer the widest possible investment options.

I suppose the best answer is how comfortable are you with picking investment funds? Remember LTSB do not recommend investment funds so chances are you are in the default fund unless you chose otherwise. This isnt meant to sound rude (so dont take it as such) but the fact you chose a bank for your pension, suggests that you are not experienced in that area.

A married couple, where the wife does not pay enough NI to get her own state pension, can be very much better off paying into a pension than an ISA. At least to utilise the personal allowance that she would have in retirement. There is no way an ISA could provide the same level of income that the pension would.