Stakeholder pension with Cavandish Online or Direct with Aviva?

sparkle18

Hi

I'm 30 and wanting to start a Stakeholder pension, at first only paying £50 a month.

Would it be best to take it out with Aviva direct or though Cavandish Online?

Any help will be much appreciated.

JoeCrystal

First of all, at least you are thinking about pension and that is good thing... but what is not good thing is the fact you are looking at stakeholder pension...

If you are working for company, did you find out if they have pension plan and more importantly, does the company contribute into it... That should be first thing to look at. If they do not, then potentially, seeing an IFA for better pension plan might be good idea.

Lastly, £50 per month does sound rather low. In fact, according to Hargreaves Lansdown pension calculator, assuming £50 per month, increasing the contribution by 2.5% per year, and growth of 7% and charge of 1% AMC, the pension fund at age of 65 and no lump sum will only yield you £1,904.35 per year.

Maybe you should reconsider the level of contribution you are planning to put in?

Cheers

Joe

sparkle18

thanks for your reply, i have looked into my employer pension, and it's a stakeholder pension with Standard Life and they don't contribute.

I know it's only a small amount at £50 a month, but it's all i can afford at the moment, hopefully will increase this in the future.

dunstonh

but what is not good thing is the fact you are looking at stakeholder pension...

There is not really a lot of choice with small premiums. It is below the minimum of most personal pension providers. Although, if it could get to £100pm then the PPPs should come in cheaper.

jimclark1967

dunstonh wrote: »

There is not really a lot of choice with small premiums. It is below the minimum of most personal pension providers. Although, if it could get to £100pm then the PPPs should come in cheaper.

Sorry to hijack the thread but this is exactly the kind of comparison I'm trying to do at the moment.

I'm 28 and have had a Standard Life stakeholder plan since I was 21 (opened direct through SL) and currently contribute £75 / month.

I wish to increase this to circa £200 and was thinking of doing this by opening a new plan (possibly via Cavendish or similar) then in due course transfer the SL one over. In January 2011 the SL plan was worth just over £18K.

Is there a breakeven point at which a personal pension is cheaper than a stakeholder?

Many thanks
JC

dunstonh

Is there a breakeven point at which a personal pension is cheaper than a stakeholder?

Most have greater fund based discounts than stakeholder. So, its more about fund value and the amount of time you get those discounts (so longer the term the better). Typically, all the stakeholder funds are available on PPPs at prices no higher than stakeholder.

sparkle18

so if your monthly payments are £100 and get a ppp, (rather than a stakeholder), there are a bigger choice of funds but how do the charges differ?

dunstonh

sparkle18 wrote: »

so if your monthly payments are £100 and get a ppp, (rather than a stakeholder), there are a bigger choice of funds but how do the charges differ?

The fund based discounts are usually higher. Or there is less or no factoring of retail distribution in the annual management charge which happens with stakeholders but increasingly less so with personal pensions.

i.e. some of the AMC on the stakeholder covers the cost of setting up. PPPs strip that out on day one and the AMC has no set up costs included in it.

Most PPPs still offer the stakeholder funds in them either cheaper or at same cost as a stakeholder. Both Aviva and Aegon, for example, have their PPPs cheaper priced than their stakeholder pensions on a like for like basis.

Edit:

just very quickly ran £100pm gross increasing at 5% a year to state pension age of 68. Aviva PPP came out with a £5000 higher value than the SHP. Aegon came out with £14,000 higher than the stakeholder. L&G stakeholder was £35k less than Aegon (edit added - meaning it was £35k worse). Those figure were all on nil commission basis (which is how you buy from Cavendish) and all assumed internal funds (stakeholder funds)

sparkle18

thanks for your help, i will look into those.