so so confused....

danster

hi all,
ive been looking at getting a pension or something to give me a little security in my future.
my mum stuffed a leaflet about SIPPS in my hand. (i read one of the posts below on SIPPS).
i am soo confused. i hear all these scare stories and think 'if i have a pension with a pension company and they go bust, then i can wave goodbye to my pension'.
can anyone offer me any advcie to get me started, have links to 'dummies guide to pensions' or something. i dont even know where to start, and it all seems a massive gamble.
- D
ps
im in full employment, am 29, and earn a low to middle wage.

dunstonh

There is a general pecking order on pension products where no occ scheme is available.

Stakeholder pension - simple to understand, defined charging process that is considered low cost. Fund options may not be brilliant but good enough for small amounts

Personal pension - Principle the same as stakeholder. Providers can choose a charging method which may be cheaper than stakeholder but can be more expensive. Fund options much greater and include decent range of external funds.

SIPP - Principle the same as stakeholder (as in how benefits are paid etc). You choose the investment and have to do all the work. Charges tend to be higher than stakeholder, particulary with smaller amounts. Ideal for the experienced investor, not the inexperieced investor. Not very good for regular transactions of small amounts.

At age 29, a personal pension would probably result in the lowest charges if you chose the right provider.

EdInvestor

Hi danster

Are you already saving in an ISA? And does your company offer a pension you could join?

cheerfulcat

Hi, danster,

There's a beginner's guide to pensions at TMF. Remember, you have your ISA allowance too; saving for retirement doesn't have to mean just pensions. Please don't let the scare stories put you off, btw. Someone investing with a pension provider may be taking on a (small) risk of financial loss due to problems with the provider, but someone who does not save for retirement is almost guaranteed an impoverished old age...

danster

many thanks for your comments. thats helped me out - for now!
- D

GDB2222

Can I just add one thing to dunstonh's excellent summary. He is absolutely right in his analysis. However, with stakeholder pensions you are guaranteed that the charges are no more than 1% pa. With personal pensions, they can be lower, but they can be an awful lot higher. So, the safe option, assuming you do not want to become an expert on pensions, is stakeholder. It may not be the best, but you are not going to get ripped off on charges, either.