Setting up a secondary pension.

ITGuy1

Hi Everyone,

I am just looking for a little advice on pensions (Kind of a giveaway given the forum!)

Anyhow, I am now the grand old (v old is how I feel) age of 35.

I didn't start a pension till later on in my 30s and then shortly thereafter left that employer to go to another one. I also had a tiny no longer added to private pension.

My current employer, a financial pensions provider, amongst other things has an ok pension. I put 4% in, they put 4% in. It is some sort of salary sacrifice scheme.

Now I don't think that is going to see me through a decent old age, or even worse the company goes pair shaped (Very unlikely but look what happened to Lehman Bros).

Therefore I want to take out a second pension and this is where you guys come in. I know I need to speak to an IFA (Not one of those dodgy ones tied to banks etc) but I am unsure if they have the flexibility I need. Therefore before going and splashing the cash I need to know if the product I want actually exists....

I have no debt except the mortgage.

In an ideal world I would like to make regular additions of between £300 and £500. Some months I would put in a lot more (Up to 6K), some months I may want to put in nothing because we may want to go on holiday or something.

Also how do I find a good IFA as opposed to one that is ok, but doesn't go perhaps as far finding a good deal as they should ?

Also do you have any tips as to how to maximise the effectiveness and tax efficiency of it ?

Cheers

ITGuy1

dunstonh

Now I don't think that is going to see me through a decent old age

Probably fair to say that with just an 8% contribution and a late start with minimal previous provision.

or even worse the company goes pair shaped (Very unlikely but look what happened to Lehman Bros).

That isnt how pensions work.

In an ideal world I would like to make regular additions of between £300 and £500. Some months I would put in a lot more (Up to 6K), some months I may want to put in nothing because we may want to go on holiday or something.

That exists.

Also how do I find a good IFA as opposed to one that is ok, but doesn't go perhaps as far finding a good deal as they should ?

IFAs handle over 70% of regulated financial transactions but account for 1% of complaints at the FOS. What you want to do is unlikely to be cost effective for most IFAs to offer services or if they do, it will be with limitations where you and the adviser compromise. It may make more sense to DIY than use an IFA.

gadgetmind

ITGuy1 wrote: »

My current employer, a financial pensions provider, amongst other things has an ok pension. I put 4% in, they put 4% in. It is some sort of salary sacrifice scheme.

Your best option is more than likely to be to increase your 4% by increasing your salary sacrifice percentage.

Do you know who the pension provider is, what range of funds are on offer, and what fees you're paying? Given your employer, I'd expect that they will have done a good deal with a solid provider.

atush

I agree with Gadget. Given your DC pension is 'ring fenced' and won't be affected by the failure of the company, I'd just increase your contributions esp if it can be done via salary sacrifice which not only saves you tax, but saves you NICs too.

ITGuy1

Hi Everyone,

Following on from last week I went to see an IFA.

I also did some research. The company actually put in a sliding scale of contributions from them. They actually put in 6% currently, 8% at 40, 10% at 50 etc.

I can add more in without issue, I just have to logon to a website and make the change in simple terms. The other good thing is you can actually do as many lump sums (AVCs) as you want, which is good for me as my income varies a lot with the amount of extra hours I do.

Now playing with the financial modelling tool provided by my employers pension provider the tool reckons that to keep 3/4 of my current level of income, I would need to deposit an extra £500 a month a month in.

So the question I have now, and that no tool seems to take into account is as I have highly fluctuating OT payments on top of my standard hours, what effect would paying in say 14K over 1 year do to the value ? Does anyone know of an online pension planning tool that takes this into account ?

Also one other question is more a "hmmm" kind of scenario.

I looked at my other pensions I have lying about in addition to my current employers pension and one of them is a Standard Life money purchase scheme with £8K in it and a Zurich one with £900 in it.

My current fund doesn't allow transfers in. I can move the Zurich into the Standard Life, but what sort of cost am I looking at to do this. My plan is to just add £50 a month to the Standard life to build up a bit of a second pension, but other than that, I cannot see what I can do with it ? Ideas ?

somethingcorporate

You're asking quite a specific modelling question that many pension calculators will not be able to do for you.

You could build quite a simple excel spreadsheet to do it for you. The assumptions that go into the overall model are not particularly complex (ie. inflation, contributions, years to retirement etc).