Private Pension or Stakeholder?

dottiepeas

Hello,

Just wondered if anyone had any views on which is better!?..

I'm recently become self employed since having a baby and only just realised that I should look into pensions, as being self-employed means I won't receive company pension contributions if I was an employee, and nor do I qualify for secondary state pension. (whatever that is!)....so it's probably a good idea to look into it now!

What do you think is better!? Private or Stakeholder?....I read somewhere that stakeholder pensions have a risk that you may receive back less than what you invested!...which probably tells me going for the standard private pension is better!?

Anyone in the same position?...self-employed and choosing the right pension scheme?

Many thanks!

dunstonh

Just wondered if anyone had any views on which is better!?..

A stakeholder is a private pension. Its one of three main types which are stakeholder, personal and self invested personal pension.

I'm recently become self employed since having a baby and only just realised that I should look into pensions, as being self-employed means I won't receive company pension contributions if I was an employee, and nor do I qualify for secondary state pension. (whatever that is!)....so it's probably a good idea to look into it now!

Very good reasons. The lack of the second state pension being key for self employed. You qualify for the basic state pension which at maximum would be £4700 per year. Not a lot in other words. The second state pension can nearly double that if you have the qualification for it (historically you could more than double but now its closer to around £3300 for an 18 year old).

What do you think is better!? Private or Stakeholder?....

Depends on what you are looking for from a pension. A stakeholder pension is a personal pension with a defined charging structure and a limited number of investment options. A personal pension has no defined charging structure but will vary with the providers. Some may be more expensive than stakeholder, some cheaper.

I read somewhere that stakeholder pensions have a risk that you may receive back less than what you invested!

Pensions dont make or lose money. They are just containers for your investments. Its your investments that will fluctuate in value. Depending on what you put in your pension will depend on the volatility you could see.

Given your lack of knowledge in this area it is probably worthwhile you seeking advice from an IFA. You are also looking at this a bit back to front. You need to decide what you want in retirement, then work out what your risk profile is and what types of investment are going to be used, that should help decide on what rate of return assumption you should use to calculate how much you should be paying. Then you should decide what type of pension is best for your circumstances.

dottiepeas

Thanks for the reply and the info! Sorry! I meant "Personal" or Stakeholder pension!...Still not sure which one to choose....to throw a spanner in the works, I read somewhere that having a cash ISA is pretty much the same thing...but may work out even better than the pension structure! Hmm...I will have to do more research I think!....

Thanks again anyway!

EdInvestor

Have a look at the "Pension vs ISA" thread at the top of the forum. very relevant for anyone who is not receiving free money from an employer or paying high rate tax.

dunstonh

to throw a spanner in the works, I read somewhere that having a cash ISA is pretty much the same thing

Not even close.

but may work out even better than the pension structure! Hmm...I will have to do more research I think!....

Highly unlikely.

Have a look at the "Pension vs ISA" thread at the top of the forum. very relevant for anyone who is not receiving free money from an employer or paying high rate tax.

The OP clearly doesnt have a clue at this stage. To direct her to a thread that discusses the fine tuning and aimed at someone with more knowledge isnt a good idea.

MrMicawber_2

My opinion only, but for most people a pension is a better retirement vehicle than ISAs. One of the main arguments for this is that you can't actually spend the money within your pension and with the best will in the world an awful lot of people would get carried away and do exactly that if they could.

No one has a clue what the future holds but investing whether in pensions , ISAs or anything else is a long term thing, and over the longer term stockmarkets have outperformed other areas. Regular payments also help to smooth out peaks and troughs.

I would get yourself an IFA - it seems you aren't too interested in the details (just guessing) and you aren't that knowledgeable. Indexed funds (i.e. those that track and index like the FTSE 100, or global indexes) might possibly be the way to go for you.

So look for an IFA, and try several, making sure you find someone you like. Limit the discussion to saying you want to put money aside for retirement and that you want a simple, low cost scheme (i.e. nothing fancy). I'd also be inclined to pay a fee. It will cost a bob or two but 'should' be worth it - depending of course how much you are going to put in per month.

No harm in putting any recommendations you get back on this forum for comment.