What's the Best Private Pension?

mrsbudget

Hi, All

Hope you can share your thoughts here. My husband is leaving 10 yrs work with JOhn Lewis and we thought the best is to freeze his pension. He is 35 yrs old and will start a new job, which does not contribute to pension scheme. Well, dont want to stop him changing job but hopefully he made the right decision. Change of job and entirely change of career:eek:..

anyway,, where will be the best place to pay for private pension, or how do we choose for the best one for him, considering his age,, thanks so much.

dunstonh

There is no one best pension scheme.

For example, contributions under £100 are usually best placed in a stakeholder (as all the best personal pensions tend to start at £100pm). At his age a personal pension would be the cheapest option. Although his preference may be more for quality/professional investments which are not as cheap. Or maybe use a personal pension that offers a bit of both (mixture of internal and external investments).

How and where he buys will also need to be factored in. Not all pensions are available on all distribution channels.

The bottom line is that a pension is a container for investments. You can have advanced investments or simple investments in there. You can have different types of investments in there as well. Different pension schemes will be priced for different types of people and their different needs.

What sort of invesmtents is your husband looking for? How would you buy the pension?

mrsbudget

Thanks, Dunstonh, actually, we dont really know much about pensions, all we both know is that something he can invest to and when he retires, he can rely on. I think it is like a sort of security he can set aside every month because state pension is not something anyone can rely on when we get old.

When you say how he is going to buy the pension, sorry we are not sure what you mean..We are really 0 knowledge on these things..Even myself, has a pension I am paying for in my work, it is salary deducted and my work contributes to it,,that's all I know.:o

Is there any websites that we can look at and at least be enlightened. Thanks again.

dunstonh

When you say how he is going to buy the pension, sorry we are not sure what you mean..We are really 0 knowledge on these things..Even myself, has a pension I am paying for in my work, it is salary deducted and my work contributes to it,,that's all I know.:o

You can buy a pension via various means. Online direct, online via a discount IFA, via your bank, supermarket or via an advice IFA.

There will be a difference in the products and the charges. You should avoid buying from your bank, supermarket or direct to provider online. They are typically the low quality options and often there is no cost saving. That leaves buying through a discount IFA or an advice IFA.

If you buy on discount IFA basis then you can pick from a limited range of providers but you have to pick the pension type, the investments, know how much you want to pay and what options you want. If you buy from an advice IFA, it will be more expensive (still cheaper than the others mentioned above) but the IFA will tell you which provider, what type of pension, what investments to use etc. The difference in costs between no advice and advice for a 35 year old is going to be very very small. Indeed, possibly no difference at all as the advice IFA will have plans available to them which can offer greater discounting than the plans offered via discount IFAs.

Like any area, you can DIY if you want but whether you are capable of DIY and not making a pigs ear of it is a different matter. You need to decide if you want to DIY or use an IFA.

MikeJones_2

The John Lewis pension scheme is a final salary scheme. It is also non-contributory, meaning that your husband does not have to pay any contributions towards it as an employer.

It is the company that currently pays the entire cost of building up your husband's pension.

There will also be other valuable benefits too, such as a widow's pension should he die before you.

In addition, I'd expect that there would be a sizeable lump sum payable on his death if he remains in their employment.

The total value of these benefits is quite substantial - probably worth in the region of an extra 20-35% of your husband's salary.

I only mention this because that's a heck of a benefit to give up if he is moving somewhere else that pays a similar salary but doesn't provide a pension scheme (even though from 2012 those employers that don't currently provide a pension for employees will have to make limited provision from that year onwards).

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

sleepless_saver

I've always found the Pensions Advisory Service website very helpful in explaining the basics.

mrsbudget

MikeJones wrote: »

The John Lewis pension scheme is a final salary scheme. It is also non-contributory, meaning that your husband does not have to pay any contributions towards it as an employer.

It is the company that currently pays the entire cost of building up your husband's pension.

There will also be other valuable benefits too, such as a widow's pension should he die before you.

In addition, I'd expect that there would be a sizeable lump sum payable on his death if he remains in their employment.

The total value of these benefits is quite substantial - probably worth in the region of an extra 20-35% of your husband's salary.

I only mention this because that's a heck of a benefit to give up if he is moving somewhere else that pays a similar salary but doesn't provide a pension scheme (even though from 2012 those employers that don't currently provide a pension for employees will have to make limited provision from that year onwards).

Mike

Hi, MIke,

Thanks,,that's what I was getting worried about also...that he has to change job and leave all those benefits. Yes JLewis is non-contributory but my hubby add some voluntary funds every month just to increase his pension.

The job he is going to is totally a different kind of job and involves travelling and leaving us (family) on a weekly basis. I think what attracts DH is the overtime pay and allowance which he could not really get from JL even with the bonus every year. The company got a stake pension that was mentioned on his interview but it does not contribute to it. Do you think, joining that stake pension from his new work would be ok?

I do appreciate your comment and would be really thankful if you could enlightened us more,,

To others,,thanks for your help,, i will have a look at this sites as well,,

lyn

dunstonh

The company got a stake pension that was mentioned on his interview but it does not contribute to it. Do you think, joining that stake pension from his new work would be ok?

That makes it no different to any other stakeholder effectively. Is that pension better than other stakeholder or personal pensions available (noting that at your husbands age, a personal pension is likely to the be the cheapest option).

MikeJones_2

Hi mrsbudget,

Firstly, I'd like to point out that I'm not trying to say that your husband is by any way making an incorrect decision to change jobs.

I'm simply trying to point out the value of what he is giving up.

I found this on the internet though:
- Employers' guide to pensions (NAPF) (its a .pdf file)

It's dated December 2003 so things might have changed but if you go to Page (Numbered) 35 (its actually the 39th page of the document) there's an explanation of the 'waiting period' that was introduced by the John Lewis pension scheme.

This may explain your husband's 'additional contributions' that you alluded to in your reply.

I also think this article is worth a read:
- Palmer talks pensions: Weigh the anchor (Professional Pensions)

I'll defer to dunstonh and other IFAs as to the merits of the Stakeholder pension though but suggest a quick browse here will help (it explains the proposed new Personal Account pension scheme which is timescaled to come into effect in 2012):
- Personal Accounts

Hope these help...and wishing you and your husband all the very best in whatever he decides to do.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

mrsbudget

Thanks a lot to you all folks, for all your inputs,,we'll have a read and hopefully choose the right one for hubby,,