Paying into pension again

Dillence

I am earning money (self employed) again after having a career break so want to start paying in to my pension (small amounts at first - £50 as I am only part time, and will look to retire in about 20 years)

The problem is I have 2 - one with Aviva (stakeholder - set up by my previous employers) and one with Prudential (not paid in for over 10 years). The prudential one has about twice as much money in.

Are there any pointers to choosing between them?

Do I need to see a financial advisor?

Any information would be great.

Thanks

Dillence

dunstonh

I am earning money (self employed)

Be aware that self employed get less state pensions than an employed person. So, you have to pay more to make up the difference (or accept you will get less)

Are there any pointers to choosing between them?

Prudential one will be closed for business. Aviva is the more likely but it depends on what version you have. They have had some good stakeholders and some expensive ones over the years.

Do I need to see a financial advisor?

You dont need to if you can pick the right pension and investments. The regular contribution is very small but if your existing fund values are high enough then it may make sense.

Loughton_Monkey

Any reason for the small amount of £50? What are you going to live on when you retire?

The usual answer to this sort of question is "I can only afford......" This should be considered as a major red flag, which basically says "I have set my lifestyle at a level which costs 97.5% of my income, which is why I can only afford 2.5% to go into my pension......"

This tends to be twice as big a mistake as most people reckon. This is because your lifestyle (costing 97.5 units) will become your 'accustomed' lifestyle, and the miserable 2.5% invested will provide peanuts. This will be a massive drop in lifestlye compared with, for example, setting your lifestyle at 80 units and investing 20.

Dillence

Thanks for your replies:

Loughton Monkey - The reason I am starting small is that I only work part time, some months earning nothing at all due to childcare. Its about 10% of my income which I can look to grow as funds increase. Also DH has just started being self employed so we don't want to lock too much money away.

Dunstonh - Thanks for the advice, its made me realise that I don't want to be self employed forever. Prudential will let me pay in but Aviva seemed better when I rang them - their advisor is calling back next week so I will probably go with them.

Dillence

westy22

Prudential will let me pay in but Aviva seemed better when I rang them - their advisor is calling back next week so I will probably go with them.

So, you're basing such a major decision which will impact on your entire future on 'seemed better when I rang them' (do you think they advised you of any downsides to their pension?) and the fact that the Aviva adviser is ringing back next week?

Do some proper research or, if you can't afford the time and effort, then pay for some professional, independent advice.

dunstonh

Prudential will let me pay in

That is unusual. Most of their legacy plans dont allow you to increment. Their modern plans do obviously.

Aviva seemed better when I rang them - their advisor is calling back next week so I will probably go with them.

Aviva dont have advisers. They have sales people and admin people.

Based on very limited info, if I was a betting man, I would say neither option is likely to be best but a modern personal pension would be. How much are the values of your existing funds. That will be key consideration as to whether modern plans would be better value.

Dillence

Dunstonh - I don't have the figures in front of me but from memory the values were:

Prudential - between £60k and £70k

Aviva - £38k

I am aware that the Aviva 'advice' would only be on their products -I have 2 pensions with them so they were talking about transferring them, but I won't do this before I check all details.

Westy22 - I do have the time and effort but I am finding it hard to understand the differences - I might speak to my husbands accountant to see if he knows of someone to advise me.

Thanks

dunstonh

With those figures, then a whole load of modern personal pensions are likely to be available which are probably going to be much better value than your two existing plans. The small premium of £50 will reduce choice but there are at least three providers that will offer personal pensions bellow their published minimum as long as you have transfer values on existing plans above a certain amount.

You should speak to an IFA. You should also consider whether its time to be on a servicing basis with an IFA as your fund values are high enough that the investments need reviewing.