Pensions?? Confused!!

missusd

Hi there,

I am a 28 yr old married mum of two.
Hubby has a pension which is through his employer.
He pays 5% of his wage and employer pays 10% roughly; he is 31.
I am wanting to start a pension also but after reading the advise on here and also the FSA website; I am confused.
I can only afford to pay on about £20 a month at the moment, once a few debts are paid off I wish to increase this to approx £100 a month.
I have no idea which is the best pension to go for.
I wish to take advantage of the 25% tax free lump sum.
Might be useful to tell you hubby's pension is on a plan where it is in the stockmarket, he is at high risk at the moment but this drops to low risk the older he gets...if that makes sense!

Please please can someone help??

Thanks x

Aegis

It might be worthwhile going to an IFA as a couple to look at how your retirement planning is progressing. Your husband's 15% contribution is fantastic for him, but it's worth looking at what the two of you should be contributing as a couple to get the most out of retirement.

At the basic level you should be looking for a pension with investments that are low cost and easy to understand. For an initial foray into the pension world it might be worth looking at a few stakeholder pensions to see if any of them look good. However, it will probably still be worth visiting an IFA to take a look at your whole financial position. Just make sure they're actually independent rather than working for a bank!

missusd

Hi Aegis,

Thanks for the advice...how much would it cost for an IFA??

Aegis

missusd wrote: »

Hi Aegis,

Thanks for the advice...how much would it cost for an IFA??

That will vary from IFA to IFA. Typically you would look at hundreds per hour if you took the fee option, but for small case sizes it might be worth electing to go down the commission route for the moment, as that will typically lower the actual costs you have to pay significantly.

An IFA might not want to do business with you for a very small case size, but even the initial consultation (almost invariably a free half hour to an hour meeting) will do you some good. If it turns out that he/she can help with ongoing investments and pension contributions, then you might get even more out of it than you thought you would.

bristol_pilot

£20 per month or even £100 per month is so small it's not worth taking advice IMO - the fee will be hundreds or even thousands of pounds and it will wipe out any benefit such advice could provide. Save it in an ISA instead.

Aegis

bristol_pilot wrote: »

£20 per month or even £100 per month is so small it's not worth taking advice IMO - the fee will be hundreds or even thousands of pounds and it will wipe out any benefit such advice could provide. Save it in an ISA instead.

Surely that depends whether you opt for fee or commission based advice and on whether there are additional needs that the IFA could offer advice on? If they need a protection policy as well, if they need to step up their investment/pension combined contributions by several hundred a month, etc. At that point an IFA might well be interested in doing it on a commission basis.

As mentioned, even without proceeding all the way through, the initial consultation (free) might be worthwhile to ensure that retirement plans are currently realistic for their expectations.

An ISA may not be as good as a pension in this case.

margaretclare

bristol_pilot wrote: »

£20 per month or even £100 per month is so small ...... Save it in an ISA instead.

If you mean a cash ISA this is not worth it for the long-term. Cash ISAs are paying so little interest nowadays, they're not worth bothering with. There is also the risk that you 'raid' this savings for other things and you end up with no savings at all!

As you are thinking ahead to retirement years, it's good that you're thinking of a pension for yourself. Have a look at the stakeholder pensions which can be started with as little as £20 a month. The tax man adds to that, so it is worth doing, especially as you intend to increase it. Here's some info: http://www.thepensionservice.gov.uk/atoz/atozdetailed/stakeholder.asp

and http://www.legalandgeneral.com/pensions/stakeholder-for-individuals/

HTH

cyclonebri1

margaretclare wrote: »

Cash ISAs are paying so little interest nowadays, they're not worth bothering with.
HTH

:T :T :T I thought it was only me;)

margaretclare

I had savings in cash ISAs at the start of this tax year and I was able to transfer them to S&S ISAs, £3,600 for the last tax year and the same for this, £7,200 in all. This was a matter of timing, had to be done just at the end of March.

As of this morning they've gained £612.40 in 5 different funds. They wouldn't have gained that if I'd left them in cash ISAs.

I also have a SIPP, which originally was a stakeholder. Stakeholders, IMHO, were one of GB's better ideas when he was Chancellor.

bristol_pilot

Sorry, I did mean S&S ISAs.

No need to pay hundreds of pounds in fees for someone to 'advise' you which one to get either.

swiss69

For this level of saving you really dont need IFA advice. Just go into your bank and speak to one of their advisors. That should be free. They will have bog standard Stakeholder pensions that should be suitable for you. Let us know what fund they are recommending and someone will no doubt let you know if it has a good record or not. Pension fund performance can be found on www.trustnet.co.uk