Young, self-employed, starting pension...

freelancer123

Hi there,

I'm 26 years old and wanting to start a pension as I'm self-employed. It all seems pretty confusing, and as I don't know all the ins and outs I don't want to make any key decisions about when and how it's paid out, and all the other options. I want something pretty safe but with half decent growth to it - and Nest seems to be the best option.

I basically want to get the ball rolling and start paying some cash in (despite the fact it'll be close to nothing at this point), without tying myself down with too many conditions and big decisions. Does anyone have any recommendations on this? Is Nest the way to go? What are the main things I need to bear in mind when choosing a pension as a self-employed person?

Cheers!

mania112

NEST is not the way to go.

Best bet, if you want to do this on your own (without an adviser) is to google Cavendish Online and select one of their personal pensions.

There are 3 or 4 on there I think at the mo, and any will suffice.

Remember, there's tax relief on contributions so, being self-employed, you can write off a percentage of those contributions in your tax return.

freelancer123

Thanks for your help. Why do you reckon Cavendish are the best to go for? What's wrong with Nest? As they are answerable to Parliament it seems my money might be a bit safer than a private pension...

kidmugsy

freelancer123 wrote: »

What's wrong with Nest? As they are answerable to Parliament it seems my money might be a bit safer than a private pension...

My golly, you are young aren't you?

dunstonh

and Nest seems to be the best option.

Interesting but I wouldnt have said that. So, what makes you think it is best?

What's wrong with Nest? As they are answerable to Parliament it seems my money might be a bit safer than a private pension...

It is no safer. All pensions have to comply with legislation. Safety has nothing to do with administration of the pension.
NEST has limited investment choice, initial charges and lacks flexibility.

atush

NEST was set up for those forced to give a pension to employees. It isn't the best way to go by far. IT is fairly restrictive, and doen'st have a lot of options.


A personal pension should be better. NEst would only be better if you had an employer who was paying into the pension alongside you.


You want the PP with the lowest charges, that has a decent range of funds including lifestyle funds so you don't have to make a lot of choices in the early days. These so called lifestyle funds will invest in a whole bunch of different things, depending on your age/attitude to risk. The younger you start, the more risk you can take in that you have a whole lot of time to make up for any shorter term falls. Paying in monthly means you have les risk of huge falls as you keep buying after any falls when prices are lower, reducing your pound/cost average.

jamesd

freelancer123 wrote: »

I'm 26 years old ... and Nest seems to be the best option.

You're really confused, then. NEST is the worst of the pension schemes aimed at the auto-enrolment pension market and should be avoided except for contributions matched by an employer. It's a scheme for lazy employers who want to do only the minimum they are forced to do by law and who can't be bothered to shop around for a good deal.

1. All standard personal pensions allow transfers in and out. NEST bans them, locking the money into NEST. A product that forces your money to stay in it is a very good sign of a poor deal. Once you reach age 55 it's possible to transfer out to buy an annuity or for other reasons, so this disadvantage matters more the younger you are.
2. It has a very limited range of investments.
3. It has high costs for its range of investments and its initial charges on all money paid in compared to alternatives.

xylophone

NEST bans them,

http://www.out-law.com/en/articles/2013/july/restrictions-on-state-backed-nest-pension-scheme-to-be-removed-in-2017/

http://www.pensionsadvisoryservice.org.uk/news/2013/july/nest-contributions-cap--transfer-ban-to-be-removed-in-2017

jamesd

Maybe that law will be passed and force NEST not to ban transfers. Or maybe it won't, since that's after the next general election.

grey_gym_sock

jamesd wrote: »

Maybe that law will be passed and force NEST not to ban transfers. Or maybe it won't, since that's after the next general election.

i think there's a good chance of it happening. for 1 thing, the Opposition are also in favour of it.

it also fits into the "pot follows member" idea.

jamesd

Well, I certainly want to see it happen. Whether it will is another question.