Pension for Contractor

sbh_2

Hi, I am an Engineering contractor earning > 100K pa. I do short term contracts and I am outside IR35. My wife does the admin work and cs and owns 50% shares of our ltd company. I have my ltd company and I don't use an accountant.
Me and my wife don't have any pension (never had).
I am thinking to invest in pensions and have no problems in locking our money till I am 55. I am 40 years old.

I have looked Hargreaves Lansdown as well as Aviva but I don't have a clue, where to start. I want to do DIY and don't want to pay huge sums to Financial Advisors. As we have substantial money in our company, I am thinking to avail all our pension limit of 50K for both myself and my wife for this year. I read that we can't avail last 3 years because we don't have any existing pensions.

Please help where to start? What are the best options? Any help, much appreciated.

Thanks
SBH

dunstonh

I want to do DIY and don't want to pay huge sums to Financial Advisors.

Going to Aviva directly will likely cost you more than an adviser. HL offer a DIY pension but take commission on it which over time can end up being a lot more than an adviser would be paid. Plus, HL have not yet repriced for the 2014 rule change. Existing business set up on old pricing will need to be changed by 2016. So, if you go with HL, you need to be prepared to review it again very soon and possibly change provider.

Please help where to start?

You need to decide what investment risk you want to take. What investment strategy you intend to use and what investments you want to use to achieve that.

You then need to research the providers and types of pension to see which suits your objectives. There are simple solutions but these often involve compromise. You would need to decide if those compromises are acceptable or not.

What are the best options?

There is no best option. Depending on what you want to achieve and how will dictate who is best for you.

bigadaj

I know you don't want to waste money on advisers but in your situation it would be worth discussing with them.

Your company will besetting up the pension and so adviser costs can be portrayed a s accompany cost and so written off against tax. In your situation I'd be tempted to speak to two or three advisers and discuss their costs, as they may not be huge in comparison to the sums involved and have access to discounts that are greater than you can access yourself.

There's no particular reason why you couldn't just pay for the set up and then manage yourself if you want to avoid ongoing costs though as dunstonh posts out things continually change in the market and I'd be tempted to undertake periodic review with the advisor as costs may reduce further in the next few years, even if you are happy with your allocation and review and management that you can undertake yourself.

sbh_2

Many thanks Dunstonh and Bigadaj for your replies. The only reason for not seeing FA was not just money but time as well. Seems after your reply, I might consider seeing a FA. We have already done some research and know, what risks to take.

What investment strategy you intend to use and what investments you want to use to achieve that.

Can you please guide, where to look for this?

You then need to research the providers and types of pension to see which suits your objectives. There are simple solutions but these often involve compromise. You would need to decide if those compromises are acceptable or not

.
Is there a website detailing these providers? We are happy to do the work and not lazy. But don't know, where to start.

In terms of achieving, save some tax and have some security when we retire. These are the main objectives. We are hoping that we haven't left it too late to achieve good pension when we retire.

@Bigadaj, we are open to seeing the advisor. Unfortunately, none of our friends have any recommendations. Any pointers please?
Thanks again for your help.
Cheers

xylophone

http://www.which.co.uk/money/tax/guides/financial-advice-explained/

http://www.unbiased.co.uk/financial-adviser


http://www.contractorcalculator.co.uk/pensions_contractors_limited_company.aspx might be worth a look.

dunstonh

Can you please guide, where to look for this?

That is where an adviser would guide. Learning about investment strategies would take more hours than it would take to set a pension up. There are also multiple strategies. The main thing is to have a strategy. Which one is less important as they all have merits. The important thing is to not hit and hope and to not invest above your risk tolerance as well as capacity for loss. If you want a simple solution then they exist but they may not be the best options.

Is there a website detailing these providers?

Not really. The research data is available to those willing to pay for it. If it was available for free, the we wouldn't have to pay for it. There are some simplistic lists with limited coverage but I am not sure how much value I would put on those as they typically involve commission being paid to the list provider if you buy the pension via their link.