Confused pension newbie

davetza

I'm trying to get my head around what to do with my pension. I've currently got a Scottish Widows personal pension (It says strategic fund??) whose current value is £35K. I'm not sure I am getting best value for money (the website says my Annual Management Charge is 1% but I am not sure if there are other charges) and am looking at what my options are.

I am a contractor so would like something that I can pay into from my Ltd company as well being able to make the payments fairly flexible dependent on how well the company is doing.

It looks like a SIPP might be a good option for me. My understanding is that I need a SIPP platform (such as iWeb) and then decide which funds to invest in. I am not going to be very actively managing the investments so it looks like an ETF fund (such as Vanguard??) would be a good idea. Does this sound right?

Otherwise I guess my over option it to find another personal pension that allows flexible payments such as the Cavendish Aviva pension.

Are these the right options for me or should I be looking at anything else? Also there seem to be lots of acronyms surrounding pensions and there charges. Can someone recommend somewhere that will explain what these mean.

dunstonh

. I'm not sure I am getting best value for money (the website says my Annual Management Charge is 1% but I am not sure if there are other charges) and am looking at what my options are.

Scottish Widows are mostly mono charged (management charge only). Some of the older ones (pre 2000) may be multi-charge.

It looks like a SIPP might be a good option for me.

The SIPP being a minority option that is geared towards the more experienced investor who wants to access investments that are not typically available on stakeholder pensions or personal pensions. Also typically considered the more expensive option (although caveats apply). So, why do you think it is a good option for you?

I am not going to be very actively managing the investments so it looks like an ETF fund (such as Vanguard??) would be a good idea. Does this sound right?

Unlikely that single sector funds are going to be suitable for you. Multi-asset is more suited for your small value and lazy investing style.

davetza

dunstonh wrote: »

Scottish Widows are mostly mono charged (management charge only). Some of the older ones (pre 2000) may be multi-charge.



The SIPP being a minority option that is geared towards the more experienced investor who wants to access investments that are not typically available on stakeholder pensions or personal pensions. Also typically considered the more expensive option (although caveats apply). So, why do you think it is a good option for you?

I though SIPPS were more flexible and not as expensive as they used to be.

dunstonh wrote: »

Unlikely that single sector funds are going to be suitable for you. Multi-asset is more suited for your small value and lazy investing style.

I'm not sure lazy is the right word. Time challenged is more correct. I also throught some people advised using trackers funds anyway as trying to beat the market by chopping and changing your investments usually does not work.

jem16

davetza wrote: »

I though SIPPS were more flexible and not as expensive as they used to be.

Personal Pensions are still cheaper though.

I'm not sure lazy is the right word. Time challenged is more correct.

Lazy is not meant to show someone who is totally unwilling to put any effort into investing. It's merely a term for someone who, for whatever reason, is unable to spend the time needed to research and monitor investments.

I also throught some people advised using trackers funds anyway as trying to beat the market by chopping and changing your investments usually does not work.

Tracker vs active funds is not what is being referred to by single sector vs multi-asset.

Single sector refers to having all your eggs in one basket with no diversification. If you are going to use single sector funds then you have to build a portfolio of funds be it trackers or active. This will need monitoring over time.

If you are not able to do this then a multi-asset fund is best.

dunstonh

I though SIPPS were more flexible and not as expensive as they used to be.

Just as personal pensions are flexible and not as expensive as they used to be. Generically, SIPPs are still the most expensive option but can be a cheap option in certain scenarios too. They are the niche option though and there are concerns by the Consumer Panel that too many people, particularly in the DIY sector, that are buying SIPPs and ending up in a worse position than they would have done had they stuck to stakeholder or (more likely) as personal pension.

I'm not sure lazy is the right word. Time challenged is more correct.

Lazy investor is a term given to people that dont research, review and rebalance their investments.

I also throught some people advised using trackers funds anyway as trying to beat the market by chopping and changing your investments usually does not work.

Trackers investing in single sectors would need you to pick around 10-14 funds and require you to decide the allocations to each and you would need to rebalance them and adjust the weighting with the economic cycle. Not something a "lazy" investor is likely to do. Multi-asset funds are diverse investments within themselves which control the asset allocation within the fund. Ideally suited towards the "lazy" investor. Dont mix active/passive with multi-asset as multi-asset can be made up passive investments, active investments or a combination.