UK pension

counciltaxbill

Hi, I've recently been thinking about my financial situation and have decided that I need to start contributing to a 'pension' over and above any salary sacrifice. One reason is that I start work on an international contract soon and this new job doesn't come with any UK salary sacrifice scheme. It has an international pension (a saving scheme basically) but this won't start until one year in, and anyway I feel I need to get serious about putting more money aside now I am in my 30's.

I spoke to an IFA but he wants to charge what is in effect about 3k just to set up a personal pension (by way of first year commission). I don't want to pay this sort of money.

I know I can create my own SIPP with say sippdeal or alliance trust. I am tempted to do this off my own back. I am not a sophisticated investor though. I'd be happy to access a range of managed funds, trackers, and ETF's only really. I don't plan to be active with individual stocks let alone esoteric instruments. I suppose I could get the access to funds with a personal pension, so the SIPP might be unnecessary although the likes of sippdeal seem cheap...so why not?

One worry I have is about having lots of money tied up with say someone like sippdeal. I am not rich at the moment but in a decade could easily have a few hundred k. What if they fold?

For this reason I am wondering about the wisdom of keeping going a couple of old UK pensions scheme I have with old employers. I think I can keep contributing and they offer access to a range of funds. I would spread my risk a little and shelter myself within the pension schemes of a couple of massive corporations. What do you think? This would save quite a bit of effort. Thanks.

atush

Your money is protected in a pension, but you can't contribute once you go overseas.

So open one now, and you can put in 50K (or it may be already reduced to 40K) or your total salary whichever is higher. You can use your savings for this. Or you can use one of the ones you already have open, if they are still allowing contributions.

counciltaxbill

atush wrote: »

Your money is protected in a pension, but you can't contribute once you go overseas.

So open one now, and you can put in 50K (or it may be already reduced to 40K) or your total salary whichever is higher. You can use your savings for this. Or you can use one of the ones you already have open, if they are still allowing contributions.

Hi, I'm still a UK resident so not going overseas.

I need to figure out if I can the tax benefits of paying into these old UK pensions.

jedsonack2

One should prepare for the time that may occur in the future.
We must start preparation before that time come. So Pension is on of the characteristics that we need to focus for the future.

grey_gym_sock

SIPPs with sippdeal or alliance trust can be cheap, depending how you use them.

other cheap options include personal pensions via cavendish online - http://www.cavendishonline.co.uk/pensions/personal-pensions/

retirement investments don't have to be in pension. (though if you can put a decent amount in pensions now, getting 40% or more tax relief on it, it's probably a good move.)

what you might do after that depends partly on the tax and pensions regime in the country you'd be working in. if it's a very low-tax country, you could use unwrapped investments.

mania112

atush wrote: »

but you can't contribute once you go overseas.

That is factually incorrect.

manzanilla

I feel I need to get serious about putting more money aside now I am in my 30's.

Good!

I spoke to an IFA but he wants to charge what is in effect about 3k just to set up a personal pension (by way of first year commission). I don't want to pay this sort of money.

Quite right! Also if you set it up now you will feel more in control of the situation, so if you want to change later, you won't automaticaly pay another few thousand to another IFA. And if you set it up you may well pay more attention to it, not assume that 'the professionals' are right

I know I can create my own SIPP with say sippdeal or alliance trust. I am tempted to do this off my own back. I am not a sophisticated investor though. I'd be happy to access a range of managed funds, trackers, and ETF's only really. I don't plan to be active with individual stocks let alone esoteric instruments.

A SIPP sounds perfect for you then.

I suppose I could get the access to funds with a personal pension, so the SIPP might be unnecessary although the likes of sippdeal seem cheap...so why not?

No reason at all. SIPPs are cheap and having one will mean that you can later move other pensions into it.

One worry I have is about having lots of money tied up with say someone like sippdeal. I am not rich at the moment but in a decade could easily have a few hundred k. What if they fold?

A few hundred k in a decade, hmmm, if you are talking about putting that much money away, make sure you also max out your ISA allowance every year. because it sounds as though you may be able to stop work before pension age, and ISAs then have the huge advantage that you can take the money from then to live on if the pension rules don't yet let you draw a pension.

But there is no reason to worry about your SIPP providers solvency - provided you have most of the money invested (and it doesnt sound as though you are the type to keep trading in and out) then your holdings will be in nominee accounts, not the sipp providers own account.

For this reason I am wondering about the wisdom of keeping going a couple of old UK pensions scheme I have with old employers.

Find out what the charges are - unless they are as low as your chosen SIPP, I wouldn't bother as I don't think the diversification is worth paying for*.

This would save quite a bit of effort

It would save a bit of effort now. But I think you are more likely to review your holdings every so often if they are all in the same pot. Having a couple of old orphan pensions you dont contribute to any more may mean that they tend to get forgotten.

* nb I am assuming these are money purchase schemes, not final salary schemes. If the latter, then you should almost certaibnly keep them.

dunstonh

I spoke to an IFA but he wants to charge what is in effect about 3k just to set up a personal pension (by way of first year commission).

IFAs cannot collect commission.

I know I can create my own SIPP with say sippdeal or alliance trust. I am tempted to do this off my own back. I am not a sophisticated investor though. I'd be happy to access a range of managed funds, trackers, and ETF's only really. I don't plan to be active with individual stocks let alone esoteric instruments. I suppose I could get the access to funds with a personal pension, so the SIPP might be unnecessary although the likes of sippdeal seem cheap...so why not?

Until you know what investment strategy you are going to use, how you are going to manage and rebalance it going forward and what research and due diligence you are are going to do, you shouldnt really think about solutions. Think how to invest first, then think who to use and what product.

At this moment, based solely on a few limited lines of text, I am not sure a SIPP is suitable for you.

counciltaxbill

manzanilla wrote: »

A few hundred k in a decade, hmmm, if you are talking about putting that much money away, make sure you also max out your ISA allowance every year. because it sounds as though you may be able to stop work before pension age, and ISAs then have the huge advantage that you can take the money from then to live on if the pension rules don't yet let you draw a pension.

Thanks for the great advice. Actually if I had 200k in 10 years I'd be very happy, I'm not that much a of high roller, but good point about the ISAs.

manzanilla wrote: »

But there is no reason to worry about your SIPP providers solvency - provided you have most of the money invested (and it doesnt sound as though you are the type to keep trading in and out) then your holdings will be in nominee accounts, not the sipp providers own account.

Ok thanks for that. I was worried I'd only be covered up to the FSCS amount and was risking it all with the pension provider. Your info makes me feel better as I can diversify some risk away.

manzanilla wrote: »

It would save a bit of effort now. But I think you are more likely to review your holdings every so often if they are all in the same pot. Having a couple of old orphan pensions you dont contribute to any more may mean that they tend to get forgotten.

* nb I am assuming these are money purchase schemes, not final salary schemes. If the latter, then you should almost certaibnly keep them.

Yeah good point, and yes they are money purchase not final salary unfortunately (one should be so lucky!). I researched one and I can't pay in now anyway. But I can move the funds out into a personal pension.

counciltaxbill

dunstonh wrote: »

IFAs cannot collect commission.

He framed it in this way; he wanted 20% of my first year contributions. He suggested I contributed £1k per month = £2400 for him.

Then he wanted an ongoing 0.5% of whatever I chip in forever after the first year.

dunstonh

He framed it in this way; he wanted 20% of my first year contributions. He suggested I contributed £1k per month = £2400 for him.

The amount is expensive. However, how you describe it is a fee. Not commission. Fee is cheaper than commission in 90% of the cases. Even when the amount is the same.

Maybe his firm only deals with large value clients and prices out smaller ones on purpose (very common). Or it is a prestige firm/city location or has a specific business model that may not be suited for you.

Then he wanted an ongoing 0.5% of whatever I chip in forever after the first year.

That would be ongoing servicing. You dont have to have ongoing servicing and you dont have to pay that. However, the adviser would have to take that into account in their investment recommendations and typically that would result in a different set of investments to someone that has servicing.