Stakeholder pension,should I switch to a PP

nicp97

Wotcha,
I have a stakeholder pension with Scotish Widdows. I'm just wondering whether it would be prudent to switch to a Personal Pension. I know nothing of funds, managed or otherwise, and don't think that I would like to do do any of the management myself. I currently put about £250 into my pension a month. Any suggestions?

toonfish

nicp97 wrote:

Wotcha,
I have a stakeholder pension with Scotish Widdows. I'm just wondering whether it would be prudent to switch to a Personal Pension. I know nothing of funds, managed or otherwise, and don't think that I would like to do do any of the management myself. I currently put about £250 into my pension a month. Any suggestions?

you could switch to a PP with Scottish Widows, and get more fund choice for I believe the same charging structure - 'phone them and ask. Other companies eg Skandia will offer a vast fund range, but you pay more for it.

dunstonh

The Scot Widows PPP is better than the stakeholder but only if you utilise the further fund options. If you dont utilise the extra funds then there is no point switching. As stakeholders go, Scot Widows is one of the better ones.

nicp97

Thanks for that. Is it worth adding a lump sum to my monthly premium? Also I've read some of your comments on sipp's and related articles, do these require constant supervision?

EdInvestor

nicp97 wrote:

I know nothing of funds, managed or otherwise, and don't think that I would like to do do any of the management myself.

There would thus seem to be no point in switching either to a PP or a SIPP, as to benefit from them, you would need to exercise some judgment on what funds your money is invested in.

Also I've read some of your comments on sipp's and related articles, do these require constant supervision?

No.

jamesd

nicp97, I suggest taking a look at equity ISAs instead of paying lump sums into the pension. The ISAs can be invested and withdrawn with greater flexibility, notably without the requirement to buy an annuity when you retire.

So long as you are a basic rate tax payer you should probably not put more into the pension than required to get full employer contributions unless you have already used the full 7000 equity ISA allowance.

You do need to learn just enough to select some fund choices from the top 25% or so in each of several categories of business and part of the world. Then it's mostly a matter of adjusting the balance once a year if you want to leave it alone as much as possible.

If you really don't want to do that then, while the stakeholder pension is less flexible, it's probably the way to go. You can get better performance with the other options but only by doing a bit more work. If you aren't going to do that work you might as well stick to the lower charges of the stakeholder.

Once your pension fund reaches say 20000, ask again because that may be enough to think about getting investment advice from an IFA who can manage it for you. Or dunstonh mght suggest a different threshold, knowing what it takes to interest an IFA...:)

nicp97

That's all been a great help, thanks. Will ask again at £20,000.

toonfish

nicp97 wrote:

That's all been a great help, thanks. Will ask again at £20,000.

surely if you do it right now, it won't take you so long to get to £20K

jamesd

nicp97, just remember that that suggested value is pretty poor advice - only suitable if you don't want to take advice and don't want to manage it yourself.

I'd much prefer it if you obtained advice from an IFA because that should get you a better fund selection and increase the rate a which the money grows. I doubt that it would cost as much as a couple of month's payments in either fees (what I recommend) or commission to get a better set of investments set up. I think that it would be money well spent to set things up nicely for a few years of growth.