new job new pension system

daxu

Hi,
I works for a public place and do have a family salary pension (I pay 6% and the employer pays the rest).
Now I just got a new job in a small company. It is at least 7000£ more but the pension system for the small company is called a stakeholder pension, which means that I can contribute to it but the company will not pay a penny to it.
Can someone give me some advices about pension? Should I just pay like 12% into the stakeholder pension or should I DIY it?

Many Thanks
Jerry

jamesd

A few mantras to start:

1. A pension scheme is a wrapper (box) that holds investments.

2. The investments you pick to go in that wrapper can vary in risk and return.

3. You must select your own tolerance for risk.

4. In a perfect investment world, someone many decades from retirement would select quite high risk because they have many years over which to average ups and downs of a relatively risky set of selections.

Given those basics:

A. A stakeholder pension is a wrapper. One of several types.

B. What do you want to put in a pension wrapper (not necessarily in a stakeholder pension)?

C. What is your personal tolerance for risk?

D. How far are you from retirement?

E. Have you used a pension calculator to work out how much you'd have to invest at some assumed return to get you the income you want? How much will your existing pension deliver of that? This will give you some idea of a target amount to invest for retirement.

F. How much attention do you want to pay to your investment? Put the money in and ignore it? Check monthly? Find it really interesting and spend an hour or more a day on it?

There are some other useful questions:

G. Do you care whether your investments are in a pension or do you just want good returns to get you a good pension? (Pensions do have some benefits, like protection if you become bankrupt)

H. Do you plan to put 7000 a year in ISAs? Anything? They are an alternative tax-saving wrapper.

Stakeholder pensions will hold funds of various sorts. You'd normally select funds to match your desired risk profile.