Pension and self-employment

therivierakid

My wife is about to become self-employed after 7 years employment. She has been paying into a stakeholder pension for the last 3 years. Her pension is with Standard Life. Should she try and continue paying into that pension or set up a new one for her new job?

Is this one of those things that we need to speak to an IFA about or is it a bit more clear-cut?

Thanks.

richardpi_2

I have failed to answer the same question and spectacularly failed to make any pension contributions for the last 3 years of self employment. Once you are self-employed, the temptation is to keep the money for a rainy day rather than lock it away in a pension... anyway that is another story...

If your wife's pension is a stakeholder then I also presume it is an index tracker (?). If it is an index tracking pension then she may want to simply continue contributing. I don't know what the current vogue is, but stakeholder pensions were the best value pensions when I last looked and there may not be much to choose between providers. Visiting an IFA may just delay her decision and put her in the same boat as me... Having said that, check the annual charges against other providers - although there is an upper limit for stakeholder pensions (is it 1%?), when I last looked, some were only charging 0.5 percent while others charged the full whack.

Richard

dunstonh

Should she try and continue paying into that pension or set up a new one for her new job?

You said she is going self employed. That means she wont have one in her new job as she will be self employed.

Is this one of those things that we need to speak to an IFA

Its up to you. Do you know enough about what is required and if the SL plan is the right one for you and if the investments are right for you or not?

Are you and your wife aware that she will no longer qualify for increases in the second state pension meaning she will get lower state pensions. The Govt takes the view that self employed prefer to look after themselves and that is one of the reasons why tax/NI is less when you are self employed. The loss of the second state pension is worth around £100k in a pension pot. So, that has to be factored into your future and current plans.

If your wife's pension is a stakeholder then I also presume it is an index tracker (?).

Not a safe assumption. Stakeholders tend to offer from 1-25 funds. Most mainstream providers tend to use the balanced managed fund as the default fund. Although some use a lifestyling option as default and that can include a spread of funds typically more biased to UK equity and overseas equity.

but stakeholder pensions were the best value pensions when I last looked and there may not be much to choose between providers.

Stakeholders are not the best value pensions and there is quite a lot to choose between the providers. Stakeholder is a defined charging structure. It doesnt mean its the cheapest. What you tend to find is that it is the cheapest for those over the age of 45 but under that age, then personal pensions can come in cheaper. The stakeholder pension is basically a simple product with simple features and simple investment options. I wouldnt want my money in a stakeholder although I do frequently recommend them to people who require a simple option rather than what is necessarily the best option financially.

EdInvestor

therivierakid wrote: »

My wife is about to become self-employed after 7 years employment. She has been paying into a stakeholder pension for the last 3 years. Her pension is with Standard Life. Should she try and continue paying into that pension or set up a new one for her new job?

If she is happy with the pension she can keep paying into it.But note she needs to increase her private retirement savings as mentioned, because of the loss of S2P.

Get a state pension forecast here: https://www.thepensionservice.gov.uk

Ring up and ask if they will give you two - one on the basis she continues full time working and the other that she's self employed so you can see the difference.