Is there a Pension TYPE debate?

darkvader

...if yes, then its not been made a sticky yet....

The question I have is which option is the best and based on what circumstances? I am specifically speaking for the middle class who aim to put amounts from £100 to £300 a month and not a lot that can be locked away for 30 to 40 years down the line when we dont know when the bus that hits us will take us to heaven :-)

So then, the options for self invest pensions (company ones not in scope here), found thanks to this forum, are
1. SIPPs self managed and currently best through bundles platforms which offer good discounts - Fidelity, H&L etc
2. Stakeholder Pensions
3. Personal Pensions

I have been through III, Cofunds, BestInvest, Cavendish and even the likes of Aviva, Scottish Widows etc and by the time I am through it, I'm lost again. So being selfish, as the thread starter, I'd like to ask which route is the best if

1. I look to invest £200 initially and gradually increase it over the years
2. I'd want the flexibility to chose my funds rather than be tied down to company specific funds (I say this because I think some platforms provide in house plus a 'few' funds from elsewhere)
3. I'd definitely want access to all asset classes (property not imp though) including the option of trackers

What gets me confused is the 'real' cost of the pension to me. Initial charges are there everywhere but then stakeholder/pension has just the AMC based on size of the fund and then there's the final cost when it comes to getting your own cash out, buying an annuity or opting for income draw down. Then someone comes and talks of trail commission ( just shows how ignorant I am on pension options!!!)

Apologies if this has been answered on here already but I have not found a single thread or discussion which clearly lays out the difference between the 3 pension types I have listed

Thanks for reading it thru till here and hope to have come clarity for the experts on here

DV

jem16

darkvader wrote: »

1. I look to invest £200 initially and gradually increase it over the years
2. I'd want the flexibility to chose my funds rather than be tied down to company specific funds (I say this because I think some platforms provide in house plus a 'few' funds from elsewhere)
3. I'd definitely want access to all asset classes (property not imp though) including the option of trackers

You can probably rule out a stakeholder then. So it's either a SIPP or Personal Pension.

Apologies if this has been answered on here already but I have not found a single thread or discussion which clearly lays out the difference between the 3 pension types I have listed

Basically;

SIPP - designed for the eperienced investor who wants to utilise more than just funds. For example you could place commercial property, shares, ETFs and cash into a SIPP as well as the normal equity funds.

Stakeholder - defined charging structure and with a choice of a limited number of internal insurance funds - around 12/15. It's useful for small amounts of £100pm or less and can be good if you need to stop/start contributions.

Personal Pension - for amounts over £100pm, a PP is probably best. Has many more funds to choose from ( 100 funds or even more), both internal and external.

Is a pension definitely what you need? Or would a S&S ISA be suitable?

darkvader

I'd definitely need a Pension. I am using ISAs to keep surplus cash I dont need for now but may later down the line for a down payment or major expense. Bankd Deposits are really low so parking our savings only in savers are of no use and we are using part of our ISAs to park surplus cash we may need very soon.
I am looking at OH and my company pensions plus 2 SIPPs/Personal Pensions to build our nest egg so we just dont touch it nor have access to it. Everything outside of the pension fund can be used at any point in time, no matter how much we resist the temptation

So to begin with, I will start a £100 pm for each of us, and from next FY increase to £150. I am due a decent raise in a year's time after which I will increase it £200 pm for each of us and maybe more

Are there any clear indicators which of SIPPs or Personal Pensions are more expensive in the long run?

DV

Annisele

You don't say how old you are or what your existing pension arrangements are (and you don't need to), but I'll stick my nose in and suggest that £100 to £300 a month is probably a low contribution for a "middle class" salary.

You can play with this to get a very approximate guesstimate of the sort of contributions you need.

Broadly, SIPPs are more expensive than PPs but they give you more investment options. If you want to use those investment options you probably want a SIPP, but if everything you want to invest in is available within a PP then you probably want a PP.

Meeper

You could, of course, find an adviser to answer all your questions for you with the benefit of consumer protection legislation.

darkvader

Thanks guys,

I will not be depending solely on my pensions (personal, company or state) to fund my retirement. This is just a nest egg I can turn to as required so even if it's there to just supplement my income, its fine.
I will be investing across other avenues and manage liquid cash ahead of inflation which will be outside of my pensions to supplement my retirement. There is also property I can depend on, which at the moment values at a net profit of £30k and is untouched. This is why I narrowed down my question to specifically how I decide on which pension type is really the best.

I agree my current contributions to the private pension is low but coupled with my company pension, roughly 12% of my income goes into pensions which more than meets my requirements. This will substantially increase in about 15 months time which is when I will double my contributions. I am 31 and OH is 29 with no kids, no mortgage and no home so we have our hands full planning at the mo

DV

jem16

darkvader wrote: »

I'd definitely need a Pension. I am using ISAs to keep surplus cash I dont need for now but may later down the line for a down payment or major expense. Bankd Deposits are really low so parking our savings only in savers are of no use and we are using part of our ISAs to park surplus cash we may need very soon.

I assume you mean you are using the S&S part of the ISA allowance as well as the cash part?

Are there any clear indicators which of SIPPs or Personal Pensions are more expensive in the long run?

DV

Generally, if only funds are being used, the SIPP is the more expensive option.

darkvader

Well jem16,

We are trying to be disciplined but I am not sure if we will reach the limit for our annual ISA allowance, thanks for unforseen expenses that somehow seem to crop up (and I dont mean luxuries, shopping and eat out!)

So even if we fall short of the maxing the ISA out, I want to lock away our pension money and not be able to touch it no matter what.

For starters, I am only looking at Funds so thank you for that answer - I will look at Personal Pensions now

DV

BLB53

I would go for sipps - compare here http://www.!!!!!!.uk/sipp-zone/
Funds generally work out more expensive than Investment Trusts, but cheaper still are individual shares.

Good luck,
BLB