Stakeholder Pension Best Way Forward?

psy

I'm looking to start a pension - I'm 38 and have not made any contributions (other than when I was a teacher for 10 years). My current employer does not run a scheme.
I understand the best type of pension for me is to go for a stakeholder.
1. Could you point in the right direction for 'best' providers?
2. Do I have to go via an IFA or can I do it all independently/online?
3. This may seem a stupid question, but if I am paying into a personal pension, can this pension be passed on to my wife in the event of my death - if I worked to 68, died at 69, all my pension contributions would have benefited my for 1 year only - I'd be quite cheesed off!

Cheers for any advice

dunstonh

1. Could you point in the right direction for 'best' providers?

See an IFA for that as there is no one best scheme that fits all.

2. Do I have to go via an IFA or can I do it all independently/online?

You can do it online but seeing as stakeholders are unlikely to be either the cheapest or the best option for someone your age, you are not likely to get the best. However, if you want to DIY then use an online execution only IFA. Do not buy direct.

3. This may seem a stupid question, but if I am paying into a personal pension, can this pension be passed on to my wife in the event of my death - if I worked to 68, died at 69, all my pension contributions would have benefited my for 1 year only - I'd be quite cheesed off!

before retirement, the lump sum is paid out with no tax deducted. The options you buy at retirement will depend on how the pension is paid out after your death. This can include spouse pensions, guaranteed income periods or return of capital not paid out by income (minus a tax charge) - known as value protect. There are also other options which could apply.

psy

Dunstonh

Thanks for the speedy reply. That's cleared up a lot of confusion for me.
You say that a stakeholder may not necessarily be cheap or best for someone of my age. What would you recommend?

dunstonh

You say that a stakeholder may not necessarily be cheap or best for someone of my age. What would you recommend?

I cant recommend anything. It is not possible to make recommendations on regulated areas on the board. Its just discussion and comment.

Plus, even if I wanted to hint at some providers, I wouldnt know which would be best as there is not enough info.

For example, how do you want to invest? - once known you can eliminate providers that dont offer the investments you have
how much do you want to contribute? - some have minimum premiums that may be higher than what you want to pay. that will eliminate those
what sort of investment access do you want? i.e. do you want to actively manage your investments and want online valuations and switching.
how flexible do you need to be on contributions? some pensions give very good terms but are priced on you paying consistently over the long term. If you dont pay in for x number of years, you may find they end up being more expensive than stakeholder.
size of contribution can also have an impact on the size of discount. Larger amounts get better terms.

Stakeholders are the simple option with limited investment choice and a defined charging structure. They are rarely the best, often not the cheapest but they are easy to set up and flexible to stop/start etc.

So consideration of what you are looking for from your investments and provider are needed before we spout of a list of names.

There are some easy pointers. Do not buy direct as the providers usually dont discount at all and keep the money they would have paid an IFA to themselves (e.g. Virgin) or only discount by a tiny amount. Dont buy from the supermarkets. They are usually cut down versions of the IFA product and prone to being replaced with something new every year or so leaving you on an out of date product (e.g. Tesco).

The cheapest way to buy is from an IFA on execution only basis. Martin's article on pensions does have an IFA geared for that - Cavendish. However, they only offer a limited range of providers and you can still get cheaper with an IFA under advice potentially.

I would say take a look at martin's pension article as a guide. Its out of date as far as provider information goes but it will get you thinking enough to be able to get the basics sorted.