Lost in the pension clouds...

dunstonh

Why are you considering ISA and AVC? Why not stakeholder, personal pension or SIPP?

Which offers the best for your needs?

TheBees

No idea!
I guess my initial thoughts are to keep things in one place and as I have a Local Government pension I assumed they are fairly good and my money would be fairly safe.
Secondly, I like the idea of putting my spare cash in an ISA as it's a bit more flexible and I can do what I want with the money at any time.
A personal pension frightens me a bit and £100 a month isn't going to come to much.
As for the other things you mentioned I have no idea what they are!

kidmugsy

Before you tie up £100 p.m. into a pension, ask yourself whether you have an adequate rainy day fund of instantly available cash. People often suggest 6 months' worth of outgoings as being a sensible target. You could accumulate that much in a Cash ISA and then think again.

jamesd

dunstonh wrote: »

People who make small contributions for short periods can end up financially worse off on the current system.

That does not seem to be a very accurate statement. Savings Credit allows an income of up to £18.54 a week for a single person. That's £964 a year and at a 4% annuity rate it'd take a pension pot size of about £24,000 to get there. For this reason a person making small contributions for a short time is likely to keep all of their extra pension income.

There is also the £10,000 capital limit for Pension Credit that for this benefit takes the savings up to about £34,000 before there is any lost money.

Housing benefit and other benefits may have different limits but even under the current system it's simply not true that someone making small contributions to a pension for a short time is going to lose their money.

It's those who have more than those quite large amounts but less than enough to be well above benefit levels who can lose benefits to match their increased income level.

jamesd

WispaDreams wrote: »

I work full time and receive minimal tax credits and child benefit

Do you know that pension contributions are deducted from your income level when working out how much you can get in tax credits? It's possible that you would get an increase in tax credits.

How long before the children are old enough to be no longer counting towards tax credit entitlement? Hopefully the answer is not "a few years" that would correspond with the time that would get you more tax credit money.

The auto-enrollment changes to pensions will require some employer contribution. That will make it a little more efficient provided your employer uses a decent pension option for it. This government has delayed the changes for smaller companies and there's really no telling when they will take effect.

The tax credit aspect is potentially of significant interest for you at the moment.

It's also worth finding out what loophole the IFA is really thinking of.