22 and applying for pension plan!

anthonyadf

Hi Guys,

I am currently 22, I have recently finished University and now in fulltime employment. My company has given me a information pack on applying for a pension. The pension is through legal and general and also comes with a pack from AWD Chase de Vere who as far as I know are the people that manage it.

The reply form says that you must choose a number of fund choices which measure from low to high risk and must also select percentages. There is also another option to choose the default option which they call the lifestyle option.

Is it best to sign up to this scheme or is it better to apply for a pension through the internet with a company such as virgin money or black horse?

I am confused on how you should select fund choices and how you should choose the risk in which you wish to take?

I would be very greatfull to gain some advice as I am bamboozled by all of this!

Thanks!

jem16

anthonyadf wrote: »

Is it best to sign up to this scheme or is it better to apply for a pension through the internet with a company such as virgin money or black horse?

Virgin pension is about the worst you can get get.

Apart from that is your employer also contributing to this pension and if so how much?

I am confused on how you should select fund choices and how you should choose the risk in which you wish to take?

Risk is a personal thing but usually the younger you are the more risk you casn take as you have many years to smooth out the ups and downs. If you are not sure of which funds to choose you either consult an IFA or go with the Lifestyle option.

anthonyadf

I have read the information pack that they have givern me and it does not seem like the company are contributing anything to the pension? I am not sure if this is normal?

Looking at the risk questionairre that they have included, I would think that I would choose moderate risk investments to get a mix of both high and low risks?

What would the average investment be if a person was earning around £25000 per year before tax? I thought that it would be 10% which would mean that they would contributes sacrifice £200 p?m with the 20% tax relief?

I found a link to how each fund is performing over the last few years but making sence of it is hard work!

But may think that it may be a better choice to go for the lifestyle option so that I do not have to worry about managing it?

dunstonh

The pension is through legal and general and also comes with a pack from AWD Chase de Vere who as far as I know are the people that manage it.

administer it. Not manage it.

Is it best to sign up to this scheme or is it better to apply for a pension through the internet with a company such as virgin money or black horse?

As Jem says, Virgin is about the worst stakeholder pension on the market. Black Horse havent existed since around 1998 when it was merged into LloydsTSB life and then later Scottish Widows.

I am confused on how you should select fund choices and how you should choose the risk in which you wish to take?

Its about knowledge, experience, amount of ongoing research and work you will put into it in future and how much you are willing to see the value fluctuate in the short term.

jamesd

Is there any mention of "salary sacrifice"? Also check for employee matching or employer contribution and whether you can join the scheme later. If it is not a salary sacrifice scheme, has no employer matching then its' likely to be best for the moment to put your money into an ISA to accumulate a property purchase deposit that will save you money compared to renting in many parts of the country.

For people of your age the best investment choices tend to be relatively high risk ones like a FTSE All Share Index tracker or an emerging markets fund. Bad choices tend to be bond or gilt funds. If the list is reasonably short you could post it here or point us to an online description of the options. The problem with the best investment choice is that younger people also tend to be less understanding of and willing to tolerate the ups and downs that come with getting the best performance, so reducing the risk (up and down movement) level is often needed to avoid putting them off. Looking at charts the ones that are most likely to be appropriate for your age are the ones that gained most rapidly from the start of 2009 to the end of 2009. Those are also likely to be the ones that dropped most in 2008.

Lifestyling probably isn't too bad at your age, though it'll probably mean concentrating excessively on investments within the UK in many pension schemes.

In a few years your employer will be required by law to make some contribution or offer some alternative pension that does have an employer contribution. No great harm done to wait for that if there's currently no employer contribution.

atush

You need to call HR and ask abt this. Usually, pensions and employer's contribs are covered in the accpeatnce/offer of employment paperwork. so find out how much your employer will pay in.