Pension. Company or Private?

james32_uk

Hi guys. I know this may well have been answered time and time in the past, but I'm oh so confused!

I'm 28 with virtually no Pension and have been offered the chance to join my employer's scheme, Pension Builder. This scheme sounds really beneficial, as I pay in 3% of my salary and the company contributes a further 4%. These amounts increase after he age of 30 to 4% and 6% and after the age of 40 to 5% and 8%. However, the investment options have not been performing fantastically to say the least!

Question is, would this be more favourable to a private pension with a pension company? Also what happens if I leave and have to transfer my company pension to a private one?

Many thanks for any replies.

dunstonh

One has free money (from the employer), one doesnt.

You take the maximum from the employer you can and make personal contributions to get that maximum. Then, any extra that you want to pay, you can put into a stakeholder/personal pension which you think has the funds to suit your goals.

You shouldn't have to transfer the pension if you don't want to. However, if you leave and find out that it is better to transfer it, then you transfer it. If not, you leave it where it is. It isnt something you worry about now.

If you were getting advice, you wouldn't be able to commence a private pension without being in the works scheme. Even if you go direct, some insurance companies will refuse to set up the personal scheme once they know you havent joined the works pension.

deemy2004

The employer should contribute to either pension scheme i.e. employer or personal, most do.

If you feel up to it, look into SIPPS

Pal

Actually most employers will not contribute to your own personal pension. If they have 100 employees all choosing different personal pension providers they have a payroll nightmare on their hands.

That said, it is still worth asking. Don't bother looking at SIPPS though. They are for very specialist circumstances and those people who don't know what they are doing but like to believe that they do. Motley Fool is a great source of amusement if you want to laugh at these people.

dunstonh

SIPPs are specialist but if your fund is over 100k, you could find the charges on a SIPP are lower than on a Stakeholder after April's stakeholder rise. Apart from that, I fully expect SIPPs to remain a minority product until the technology is in place to combine personal pensions and SIPPs into one proper wrap product.

Debt_Free_Chick

And you can, of course, use a SIPP as a "funds supermarket". You have the umbrella SIPP and then cherry pick the funds you want from whichever manager you prefer. Granted, there are some managers who offer access to other managers' funds, but you pay a premium for this. For larger funds, you might find it pays to select multiple manager funds via a SIPP.

deemy2004

My SIPP charges me a flat fee annual charge of £17 per year - sippdeal.co.uk, which is far less than the interest earned on cash on account.

Hence annual charges are lower than those of a pension fund...

It should be straightforward for your employer to setup a DD to your Sip account, does not require any major payroll surgery...

deemy2004

Pal wrote:

Actually most employers will not contribute to your own personal pension. If they have 100 employees all choosing different personal pension providers they have a payroll nightmare on their hands.

That said, it is still worth asking. Don't bother looking at SIPPS though. They are for very specialist circumstances and those people who don't know what they are doing but like to believe that they do. Motley Fool is a great source of amusement if you want to laugh at these people.

LOL

Can't do worse than most fund managers