Pensions for the Self Employed

geb0205

Hi there,

I've not posted for a long time but I do lurk in the forums and have had exellent help from you guys.

I've been graduated from University for 5 years now, and at the tender age of 27, I am somewhat concerned that as a self employed sole trader, I have no pension. And, lets face it, by the time I come to reture, it's unlikely that state pensions will exist!!

I was tempted to go to an IFA, but I was put off the idea by several business collegues saying they are not totally independent as they do have some commission connections.

At present, I'm toying with the idea of saving a small amount each month in a savings account that I have restricted access to, or to an ISA, but then, I'm concerned I won't have the will power to not use the money in an ISA if I need it/want something.

As to the world of pensions, I have absolutely no idea where to start or what I should be looking at. I Need something thats reasonably flexible as I started my own business 3 years ago in a rural community and some months business can be very slow with very little disposable income, and yet some months can be quite the opposite. At the moment, I would hope to be putting around the £50 mark away each month, that, as my debts from university decreases, then that figure can increase dramatically!

Does anyone have any suggestions of where to start, what I should be looking at and what is suitable?

Many thanks in advance!

dunstonh

I was tempted to go to an IFA, but I was put off the idea by several business collegues saying they are not totally independent as they do have some commission connections.

Your business colleagues dont appear to know the difference between FAs and IFAs. They describe FA who operate on a commission basis and represent one or a limited number of insurance companies. IFAs are independent. They represent you and can operate on fee basis or commission basis. However, some banks operate IFAs and they are known to be more panel based. (given your tiny contribution, commission basis would actually be better for you).

At the moment, I would hope to be putting around the £50 mark away each month

That makes the choice easier. A tiny contribution of that amount rules out personal pensions and SIPPs and leaves you with stakeholder pensions or S&S ISAs.

It wouldnt be worth seeing an IFA as IFAs are geared more to the middle and high net worth market. Your contribution is lower end (doesnt mean you are but your contribution is)

Meeper

If you are concerned about adviser commissions, use an adviser who works on a fee basis and agree the fee up-front for the piece of work you require.

If you don't want to pay adviser fees, and you don't want them to get any commission......not sure what you want. Looks like you will be relying on advice from non-qualified opinions which may or may not be valid, but certainly don't come with any compliance and consumer protection legislation!

atush

I think if you have no other savings you might need to start with building up an emergncy fund. In an ISA if you pay tax. Paying off any and all debt first ;-)

Then consider investing, either in a stakeholder pension, or in a S&S isa or an investment trust savings lan (which can start as low as 20-25 quid).

But remember, should you go bankrupt then any and all of your savings outside a pension could be at risk of seizure by court judgments etc.

Very wise to start thinking about this now, and although I understand you have 'impulse control' issues I do think you need an emergency cash buffer or you will end up in debt by borrowing during emergencies.

geb0205

Meeper wrote: »

If you don't want to pay adviser fees, and you don't want them to get any commission......not sure what you want.

There's no need to be so defensive about it... I merely asked a question as to where the best place to start is. I know about fixing human bodies and diseases, not about how to invest money, which is why I posted this thread in the first place!! Jeez!! Am I not allowed to have recieved seemingly bad advice and query it? Should I have kept my mouth shut?!

Atush, I think you've made the most sense. I DO qualify for bankrupcy, but am currently doing everything I can to NOT have to go there. My debt has reduced by half, and is still hopefully reducing, but it really does concern me that I have only small sums reserved for a rainy day but none for long term savings of the pension kind.

Regarding Stakeholder pensions, is there any information I need to watch out for?

atush

Well charges to open, and ongoing charges. But you do need to attack your debt as a matter of urgency first and get that cash savings buffer.

Go to the Debt Free board and post your personal (noit business) Statement of affairs and the good folk there will help you figure out ways to cut your spending to slam down your debt.

I presum you already know but you start with th highest interest debt first, paying min on the others. Once that is done, hit the next highest with all your spare cash.

If you want to open a stakeholder for 20 quid a month in the meantime go ahead. Try Cavendish online. But i'd hit the debt first. If you need a small cash buffer (so you don't get further into debt) but want to keep it from temptation, freeze a ziplock bag with a 100 quid or so in it in a bowl of water so you can't get to it easily ;-) That way if something breaks down and you need the money you wont' have to borrow it.