New Stakeholder pension at 50.

tabath

My OH was made redundant in july from her job, she had a good company pension scheme and had put in 21 years. It was a 60th final salary scheme - final salary about 42K.(We are still in the process of trying to get it enhanced by appealing to the ombudsman).

She has just started a new job(only 9 month contract but looking good for it to be made permanent according to her line manager) and this company has a stakeholder pension for new employees. If you contribute 6% they put in 9%. My OH is on 50K and the stakeholder pension is with Friends Life.

I don't know a lot about stakeholder pensions so my questions are - should she join it and put in the maximum 6% contribution and does she have any control over what investments are made with it?

OR should she open a SIPP which I would run as an investment vehicle OR a combination of both.


Are there any other things we should take into account?

dunstonh

should she join it and put in the maximum 6% contribution and does she have any control over what investments are made with it?

A total no brainer to join it. 9% of salary as free money. Nothing else will come close to match that.

Stakeholders are basic products with limited investment choice but the Friends Life range is good enough.

OR should she open a SIPP which I would run as an investment vehicle OR a combination of both.

Do you think your investing ability is good enough to catch up with the 150% increase that the stakeholder gets overnight?

e.g. if you put £100 in the SIPP, will you be able to beat the £250 that goes into the stakeholder at the same cost as your £100?

tabath

Thanks, she has to fill in the form and make some choices on the funds they have. Is there anywhere I can look to help us choose which would be the best funds under the circumstances:

dunstonh

tabath wrote: »

Thanks, she has to fill in the form and make some choices on the funds they have. Is there anywhere I can look to help us choose which would be the best funds under the circumstances:

With SIPP being the experienced investor option, what investment areas was she going to be looking to invest in inside of the SIPP? The stakeholder wont have the same but it may have similar areas.

Which fund range if available on the FL range? (employers can limit the range).

jamesd

She can also ask about the possibility of transferring from the work pension to another one while still being in it.

You can try googling for the names of the funds to find out more about them.

kidmugsy

Consider whether she should also open a SIPP and pay in just enough to avoid higher rate income tax (starting next tax year, probably). Once she is drawing her final salary pension and her state pension she may well qualify for Flexible Withdrawal which will give her, as the name suggests, lots of flexibility in taking her money out.

tabath

ITs made up of the following funds:
A company specific Diversified Strategy Pension fund with what is called lifestyle options? of either 10,5 or 3 years.

From a quick look at its listing on the LSE there are only performance figures for upto 6 months so I am guessing it has only just started this fund? Yield to date is 8%.

This fund is the default option.

You then have individual fund choices from:

FP BlackRock Emerging Markets Equity (Aquila HP)
FP Baillie Gifford International
FP Baillie Gifford UK Equity Core Pension
FP BlackRock (50:50) Global Equity Index (Aquila HP)
FP BlackRock UK Equity Index (Aquila HP)

FP Balanced Index Fund of Funds

FP Newton Balanced
FP BlackRock Over 15 Year Corporate Bond Index (Aquila HP)
FP BlackRock Over 5 Year Index-Linked Gilt Index (Aquila HP)
FP Fixed Interest
FP Pre-Retirement Fixed Interest
FP Cash

tabath

The other thing I was wondering is if we put in 6% we get 9% off the company. However are we allowed to put more than this 6% ?

And if so could we put in enough so that it takes her taxable pay below £50k ?

jamesd

Normally you can choose to pay in more than the 6%, but occasionally a company will restrict that. You'll have to check to be sure in her case. Normally she would be able to put in enough to get below £50,000. The standard HMRC cap is up to £50,000 of pension contributions per year.

A new diversified strategy fund probably isn't a good buy. From those choices I'd go with a combination of:

FP BlackRock (50:50) Global Equity Index (Aquila HP)
FP Baillie Gifford International
FP BlackRock Emerging Markets Equity (Aquila HP)

tabath

Thanks will take a look at them.