Private pension options when employer is paying

moneysavinglion

Hi all,

My employer is a small organisation and instead of having their own pension scheme, the benefit they provide is to pay into a private pension of your choosing. Because the employer contribution is generous, I don't plan to make employee contributions too.

Two questions for everyone...
1) Is this straightforward/normal or does it create a tricky tax situation for me?
2) Any suggestions of good products? Virgin Money's pension seems the most straightforward to get up and running.

Thanks!

gadgetmind

There are no tax issues unless their contributions go over the annual allowance, which is currently £50k pa but drops next year to £40k pa.

I've never really heard anything good about Virgin but am no great expert regards their range.

You can organise a basic Private Pension with many of the big names via Cavendish Online and it's cheaper this way than going direct! I'm with Friends Life and a lot of their internal funds are pretty good.

dunstonh

2) Any suggestions of good products? Virgin Money's pension seems the most straightforward to get up and running.

It may be straightforward but its expensive and poor quality. Possibly one of the worst out there.

xylophone

You might wish to take independent financial advice http://www.unbiased.co.uk/pensions

Preliminary reading
http://www.adviceguide.org.uk/england/debt_e/debt_pensions_e/debt_starting_a_pension_e/choosing_a_personal_pension.htm
http://www.moneysavingexpert.com/savings/discount-pensions
http://www.cavendishonline.co.uk/pensions/
http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/money-purchase-schemes/salary-sacrifice

somethingcorporate

How generous is your employers contribution?

I find it unlikely an employer would be generous enough to mean you do not need to contribute, especially given the additional tax advantages of contributing.

The "general" rule if you are starting a pension is half your age as a %, so if you are 26 you should be saving 13% of your gross salary into a pension.

moneysavinglion

It's 10% which is quite high

atush

But not high enough unless you are 20.

REmember, you get basic rate tax relief (or more if you are into the HRT band) so 100 into your pension will only cost you 80.

If you don't save into your pension as well (and I think you should) fill your ISA allowances.

moneysavinglion

atush wrote: »

If you don't save into your pension as well (and I think you should) fill your ISA allowances.

I do.......

somethingcorporate

As per the posts above, unless you are 20 the 10% contribution is not likely to be sufficient over the long term.

atush

moneysavinglion wrote: »

I do.......

Is that just the cash Isa or the S&S isa too?

If both, great. But i'd still put at least a few % into the pension.

moneysavinglion

Cash ISA. S&S are a minefield (and too high risk for me)