Pension advice needed

GeorginaR

Hi,

First time poster here so I hope this is okay. I'm 27 years old and, since starting work with my current employer 4 years ago, I don't have a pension. I paid into one at my previous employer for 3 years, then left there when the office closed down.

I don't want to pay into the work pension plan as it was frozen last year and there's some doubt now as to how secure the money people have already paid into it is. I'd like to start a private pension but have no idea where to begin - I've looked on various websites (Virgin, NatWest etc.) at what they offer but honestly don't know what's a good deal and what isn't.

Any advice would be very much appreciated.

Thanks

chrismac1

My rule of thumb as to good value is:

no more than 0% up-front commission
no more than 1% per year up-front commission
no with-profits policies as even the FSA has said they are pants - though not in those exact words.

In your position I'd be thinking about ISAs as well as pensions - because you can get your cash out if a rainy day comes along. And I'd be looking at a cheap - 0.4% a year or less, no up-front fee - index tracking fund for at least part of my long-term savings, whether held within an ISA or pension.

Whichever advisor you see - unless you go direct - always, always ask the questions on my site. If they squirm about how they are going to get paid, or answer evasively, thank them for their time and leave.

dunstonh

I don't want to pay into the work pension plan as it was frozen last year and there's some doubt now as to how secure the money people have already paid into it is.

Be careful. Workplace rumours and myths about pensions are nearly always wrong. There is a major firm in our area where the employees nearly always slag off the pension. Its not the best but its a group personal pension with employer contributions. Its cheap and it gets free money added to it. There is nothing to dislike about it. However, all it takes is a vocal employee who thinks they know everything but knows nothing (your typical Daily Mail read for example) and you get many of the employees repeating that over the years and it becomes ingrained into the mindset.

I've looked on various websites (Virgin, NatWest etc.)

You have picked two of the worst there. What made you look at them?

My rule of thumb as to good value is:

no more than 0% up-front commission
no more than 1% per year up-front commission

I disagree. Getting rid of the charges early on a multi-charge pension is typically better than a mono charged pension for those with more than 12-15 years to go until retirement. The differences can be staggering for some people.

Also, 1% a year commission is a very high amount. The typical trail commission on a servicing contract with an adviser is 0.5%. If you dont want servicing then you dont need to pay that. I doubt that someone starting out with a nil balance will need servicing like that in the short term unless the contributions are large.

CLAPTON

what exactly are your companies pension details?
if the company also makes contributions then its probably the best starting point