Should I start a pension?

kalico

I'm looking for advice in light of a bonus payment I will get from my employer.

It's a fair chunk of money and if I just take it as salary then I'll get roughly half, given the tax/PAYE etc.

Does anyone know how I can mitigate the loss through a pension?

I currently do not have a pension of any type. I invested, cautiously, over the year in property and have seen good returns. My previous reluctance to have a pension was fuelled by poor returns and also witnessing some of the fiascos of recent years. However, at 40, this maybe now should be an option.

If so, where do I start? My first thoughts of going to an IFA leave me a little cold since I know a few who are only just short of being crooks! Certainly, they don't qualify for the 'I' of IFA.

All advice gratefully received.

dunstonh

Does anyone know how I can mitigate the loss through a pension?

by using a pension. You could ask the employer if they will do it via salary sacrifice which would be the best option but they dont have to. If they dont, then you can make your own contribution afterwards and get tax relief added on.

I currently do not have a pension of any type. I invested, cautiously, over the year in property and have seen good returns. My previous reluctance to have a pension was fuelled by poor returns and also witnessing some of the fiascos of recent years.

What fiascos would they be relating to the type of pensions you would have available?

What are these poor returns you are on about?

If so, where do I start? My first thoughts of going to an IFA leave me a little cold since I know a few who are only just short of being crooks! Certainly, they don't qualify for the 'I' of IFA.

If you believe they are crooks then you should report them to the FSA. Most FAs are attached to salesforces and whilst I am no fan of salesforces, that doesnt make the people involved crooked. The advice may often be basic and limited but thats what you get when you use an FA and not an IFA.

Also, if they are not IFAs then how do you know a few IFAs?

All advice gratefully received.

not enough to go on even if we could give advice. You appear to be limited in your knowledge on pensions and investments. You have been influenced by media articles by the sounds of it relating to schemes that have nothing to do with the type that you have available. So, you need to have a more open mind and be willing to understand and learn about the options.

Depending on how you decide to invest will depend on the type of pension you want. Depending on how you intend to purchase it will also depend on the type of pension and which providers are suitable.

kalico

dunstonh wrote: »

by using a pension. You could ask the employer if they will do it via salary sacrifice which would be the best option but they dont have to. If they dont, then you can make your own contribution afterwards and get tax relief added on.

What fiascos would they be relating to the type of pensions you would have available?

What are these poor returns you are on about?

If you believe they are crooks then you should report them to the FSA. Most FAs are attached to salesforces and whilst I am no fan of salesforces, that doesnt make the people involved crooked. The advice may often be basic and limited but thats what you get when you use an FA and not an IFA.

Also, if they are not IFAs then how do you know a few IFAs?

not enough to go on even if we could give advice. You appear to be limited in your knowledge on pensions and investments. You have been influenced by media articles by the sounds of it relating to schemes that have nothing to do with the type that you have available. So, you need to have a more open mind and be willing to understand and learn about the options.

Depending on how you decide to invest will depend on the type of pension you want. Depending on how you intend to purchase it will also depend on the type of pension and which providers are suitable.

OK, so it seems I have been a little hard on poor old IFAs. I am sure there are many really good IFAs about, but I remain a little sceptical whenever commissions are involved, though I do accept these are disclosed now.

You're right that I have little knowledge of pensions and investments. That's why I started on the forum. I can see that being such a fool has upset you and that wasn't my intention. I do have an open mind and do wish to learn. I cannot see why I shouldn't start on MSE to do that.

There have been numerous issues with pension providers over the years. Equitable is one, surely? The Mirror Group pensioners also lost out I understand. And yes, the returns on pensions don't seem to have set the world on fire.

I'm not saying that pensions are a bad thing. Just that I have produced more profit on my investments in property, even allowing for CGT etc. I also will not be forced to buy an annuity and could, if I wished, sell up tomorrow.

The main downside has been the tax breaks, or lack of them, but even allowing for that, property has been more profiable for me in the long term.

Now I need to look at acquiring a pension and would have liked some knowledge or basic pointers before I start talking with the professionals. Don't shoot me for it!

So, it seems that the MSE forum is not the place to ask such a basic question. Anyone know a good IFA then? One who is truly independant?

Thanks.

dunstonh

OK, so it seems I have been a little hard on poor old IFAs. I am sure there are many really good IFAs about, but I remain a little sceptical whenever commissions are involved, though I do accept these are disclosed now.

You were being hard on IFAs without having any experience or knowing any IFAs. You were basing your opinion on FAs. The FOS recently announced that complaints received against IFAs were just 2% and only around a third of those were upheld. Thats a continued drop year on year that has been going on for years. The FOS were singing the praises of IFAs back when it was 11% of complaints. The main reason is that IFAs account for the majority of transactions. So, you would expect complaints to reflect that but they dont.

If you have doubts over commission then dont choose the commission option. Go with fee or a hybrid fee.

You're right that I have little knowledge of pensions and investments. That's why I started on the forum. I can see that being such a fool has upset you and that wasn't my intention. I do have an open mind and do wish to learn. I cannot see why I shouldn't start on MSE to do that.

I'm not upset over anything. However, you need to make some decisions with an open mind and your post suggested that you were not going to do that. You have jumped to many assumptions, most of which dont apply to the subject.

There have been numerous issues with pension providers over the years. Equitable is one, surely?

Equitable Life was down to guarantees they offered being unrealistic and the solvency of their with profits fund. That was the issues of a fund.

The Mirror Group pensioners also lost out I understand.

Nothing to do with personal pensions.

And yes, the returns on pensions don't seem to have set the world on fire.

This highlights where you are making assumptions which are not necessarily correct. pensions are just tax wrappers. A container for investments. Those investments could be in cash, fixed interest funds, property or shares from all over the world. Some of these have given staggering returns whilst other areas have been poor. Pensions themselves done make or lose money. Its where you invest that does.

I'm not saying that pensions are a bad thing. Just that I have produced more profit on my investments in property, even allowing for CGT etc. I also will not be forced to buy an annuity and could, if I wished, sell up tomorrow.

Have you costed that against the tax relief on pensions, tax free growth using say property funds within the pension? You are not forced to buy an annuity until 75 currently. Even if that rule still exists in future, you have to remember that pensions are for providing an income. An annuity at age 75 has a very high rate for a guaranteed level of income for the rest of your life.

The main downside has been the tax breaks, or lack of them, but even allowing for that, property has been more profiable for me in the long term.

Long term is 10-15 years plus. If you bought property 15 years ago, you would not have made much money at all. You would bought during the last house price crash with a bit more to go. Then spent the next 6-7 years catching up. Then had 6-7 years of good gains but now be suffering losses that look like they are going to be comparable or greater than that seen on the stockmarket.

It is easy to pick different periods when all the asset classes have a period of outperformance. It doesnt matter if its cash, fixed interest, property or stockmarkets.

Now I need to look at acquiring a pension and would have liked some knowledge or basic pointers before I start talking with the professionals. Don't shoot me for it!

Again, it comes down to the type of investments you want to use, how you intend to buy it and what features you want currently.

So, it seems that the MSE forum is not the place to ask such a basic question.

Its not a basic question. Its very easy to give you a simple answer and tell you to take out a Virgin stakeholder. It wont be the best option but its simple. Problem with simple is that you compromise. You dont sound as if you want to compromise. That means either spending the time learning it and it will be a lot of time or getting someone to do it for you.

Anyone know a good IFA then? One who is truly independant?

All IFAs are. Hence the I.