New pensions saver... maybe!

DiggerUK

Ic3Knight wrote: »

Finally (and I realise this may be a big "finally" and turn out not to be too final!), IFAs... is there a big benefit it going to see one?!
Ic3Knight

I'll get back to you on that one. :rolleyes:

dunstonh

I know there's an article on here about the possibility of buying the pension through a "discount broker" to avoid paying comission

Discount brokers are IFAs. Most IFAs will operate on an execution only basis. However, the article, focuses on a small number that can handle the transactions via a website of this size.

is that generally thought of as a good idea for someone in my situation? I mean, do the potential savings make it a sensible option?

If you know what you want (which provider, what funds etc) and dont mind not having full market access (Cavendish for example dont retail all the providers or products on their execution only panel) then its a good option for you. If you want provider, product and investment advice then its not a good idea to DIY as you will not get it under execution only or direct offer.

IFAs... is there a big benefit it going to see one?

Like any thing in any area, if you cant do it yourself you either get someone to do it for you and pay them for it or you do it yourself and run the risk of making a pigs ear of it.

Ic3Knight

Ok, last question (for now!)

Can anyone give me a rough idea of cost for talking to an IFA? just some kind of ball park figure based on fees?

Cheers!

DD2_2

I don't like to offer direct financial advice, and feel strongly that others on here shouldn't either. However, I can tell you what I have done with my and my wife's pensions and perhaps it'll help you with your own decisions.

I had about £66k in various company schemes (all money purchase) and when I went self employed (about 2.5 years ago), I had no idea what to do with it, where to invest it, what funds to put it into, etc. I was with my last employer less than 2 years and they insisted I move my pension from their fund (either that or they would just pay me off and keep their contributions).

I therefore set up a stakeholder pension with Legal & General. I transferred my most recent company pension into there and I also moved all the 'bits and bobs' I had in other company pensions schemes. I put them all into a managed 'adventurous' fund. The great thing about stakeholders in the low annual management charge and the zero charge for setting one up and more importantly zero charges for moving elsewhere. Once I had consolidated my pensions into the stakeholder and learned a lot about investing, I transfered them into a SIPP, where they reside today.

By investing time in learning about pensions, the stock market, etc. I learned enough to move my whole pension pot into a cash fund when I saw that the stock market was looking a little 'rocky' the FTSE100 was at about 5800 when I moved, and it dropped down to 3600 when I put my money back into equity funds. Had I left them alone in the various dormant company schemes I would have lost tens of thousands, instead I have increased my pension pot from £66k to its current value of £90k.

It's definitely worth taking almost an obsessive interest in your pension pot and in investing in general, but you don't want to wait too long while you learn before investing. I put my money in a cheap and cheerful stakeholder while I learned, and that might be a good option for you too - though as always, everyone should do their own research!!

BTW, I have used the same strategy with my wife's pension. She gave up work to take care of our little one about 18 months to 2 years back and so I staretd up a stakeholder for her. She now has £10k in that and it's now substantial enough that I am thinking of moving her to a SIPP too (she also has Standard Life and other shares that can go into the pension).

dunstonh

Can anyone give me a rough idea of cost for talking to an IFA? just some kind of ball park figure based on fees?

You have the choice of commission only or fee basis. If fee basis and a simple option is required then it should be very cheap. I would be suprised to see figures in the £250-£300 range (although dont be surprised to see some charging more). If you want a more advanced option then expect it to move towards the £500-1000 range. The fee on these can often be deducted from the pension giving you effective tax relief on the fee. Many of these can also work out cheaper than stakeholder as well. Stakeholder is no guarantee of being the cheapest option. It is just a simple charging method with simple investment solutions. It is not designed to be the best in any area.

DD2_2

I went to an IFA before I gave up and decided to stick with the stakeholder and learn to invest myself. He simply put 10% in this fund and 10% in that with no real underlying strategy, he had a huge upfront commission with zero trail and would have tied me into a pension provider for years due to punative exit charges. Luckily I knew enough from visiting this site, etc and never took him up on his suggestions.

I would have lost thousands with his recommendations because it was mostly in equities and the stock market crashed 6 months later, plus the MoM funds he recommended had 2% commission charges.

Once I learned enough to start investing for myself and had a pot large enough to warrant it, I moved out of the stakeholder with zero transfer charges.