The best way to find a pension?

ness_w

Up until the end of March my husband has had pensions with local authorities and the NHS. Now he needs to identify his own way of planning for retirement to which his employers will make a contribution. He has about 21 years pension contributions behind him.
We were wondering how to begin looking, I am inclined to think that we should be paying a financial advisor rather than getting 'free' advice. We think, at least at the moment, that a traditional pension plan isn't really going to do much good, is that right?
Any advice on how to start working out our options would be very welcome.

dunstonh

We were wondering how to begin looking, I am inclined to think that we should be paying a financial advisor rather than getting 'free' advice.

Sensible opinion but make sure its an IFA not an FA.

We think, at least at the moment, that a traditional pension plan isn't really going to do much good, is that right?

Why?

ness_w

Because the markets aren't growing and the interest rates are barely above 0%. Does that make no difference? Thanks for your help.

dunstonh

Because the markets aren't growing and the interest rates are barely above 0%. Does that make no difference?

So, do you think it would be better to start investing after the markets have gone up 30%-40% on the current position? Or better to buy the units when they are lower in price and then benefit when they do eventually go up?

Also, stockmarket is just one option. Most people dont have the risk profile to invest 100% into the stockmarket.

ness_w

dunstonh wrote: »

So, do you think it would be better to start investing after the markets have gone up 30%-40% on the current position?
Also, stockmarket is just one option. Most people dont have the risk profile to invest 100% into the stockmarket.

When you put it like that..!
As you see, we aren't versed in the money markets and up until now both of us have been lucky enough to have government pensions so not needed to think about this. We really don't have a clue about different kinds of pensions at all and obviously need to do some research.

jamesd

Now and the last year have been good times for contributing to money purchase pensions, letting people buy at lower prices than for many years. Prices may still fall further before recovering but on the whole it's good rather than bad for those making contributions (and bad for those taking their money out with a deadline).

An IFA may well offer you the option of paying by commission from the pension company. That can be more efficient than paying a direct fee. It'll depend on just how much is being paid in contributions and the services you want, things like managing the investments for you or not.

You should start by getting state pension forecasts for both of you, then adding in the effect of the contributions to pension plans that have been made so far. Compare that to how much you want in retirement and that'll give you and the IFA some idea of how high or low your pension contributions should be.

When choosing investments, the average growth rate and the amount of year by year variation both go up at the same time, in general. You will need to set a target amount of variation you'll accept and that in turn will limit or facilitate how much growth you might see. Normally you'd reduce this as retirement approaches, so a drop near to retirement won't affect the ability to buy an annuity.

Buying an annuity isn't mandatory, income drawdown can be used instead, and that option would result in a reduced need to become more cautious as retirement approaches. The NHS pension your husband gets suggests that you and he may be able to accept more volatility/risk/up and down movement because that existing pension would provide a minimum guaranteed income.

You each get a tax free personal allowance so it's usually good planning to arrange for pension income to be fairly evenly split, at least evenly enough to use the full tax allowance of both of you. If you're not paying into a pension of some sort a good first move is probably to start doing that, to exploit the tax benefit.

a7man

Its funny because when market crashes happen everyone worries and puts their money into less risky investments. The market will then recover and people will see the good returns and invest in stocks again...only then its too late and the market is ready for its next dip.

Its simple..buy more when cheap & buy less when expensive, the opposite of the general consensus of the public when a crash happens.