What Pensions To Go For?

dave_smith14

Hope I’m ok to jump right in with a question for my first post?!

I’m currently 34 and have no pension at all. My company have announced they will now match up to 5% of what I contribute and I want to get my skates on and start one up for the future and to make the most of this free money from my company and tax.

My company at this time have no group pension and said I will need to start my own pension. Impression I got that even when they have to contribute by law (Auto-enrol) they still probably won’t have one and will continue to pay into the individual ones. (Even though the paperwork will be allot).

So what do I do? I have no idea what I’m doing or what is on offer and what is the best pension type or company to choose from. So I assume at this early stage I need something quite simple (Though I assume that means I’m not going to get the most out of my savings)

A friend of mine who is a FA said he just does company pensions now and said I should get a Aviva/Standard Life/Norwich Union (can’t remember which one he recommended) stakeholder pension as the fees are low.


On a side point how would the monthly amounts work out to?
Say I’m on £40k before tax and NI. If I were to put in 5% and my company matched it: -
Is my monthly amount £166.66
My company £166
Plus tax back/savings? £?

Thanks.

xylophone

http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest/employer-contributions

Worth a look by you/employer?

dave_smith14

Thanks. SIPP pensions are risks though aren't they? I wouldn't have a clue what to invest in. My luck i'd only get back half of what I put in.

jem16

dave_smith14 wrote: »

Thanks. SIPP pensions are risks though aren't they? I wouldn't have a clue what to invest in. My luck i'd only get back half of what I put in.

SIPPS are no more nor no less risky than any other type of pension.

Basically a pension is merely a tax wrapper and a container for your investments. What you put inside the wrapper is what decides the risk and there are thousands of funds and shares available to choose from.

If you don't have a clue then either you need to do research and learn or you need to pay an IFA to advise you.

dunroving

dave_smith14 wrote: »

Hope I’m ok to jump right in with a question for my first post?!

I’m currently 34 and have no pension at all. My company have announced they will now match up to 5% of what I contribute and I want to get my skates on and start one up for the future and to make the most of this free money from my company and tax.

My company at this time have no group pension and said I will need to start my own pension. Impression I got that even when they have to contribute by law (Auto-enrol) they still probably won’t have one and will continue to pay into the individual ones. (Even though the paperwork will be allot).

So what do I do? I have no idea what I’m doing or what is on offer and what is the best pension type or company to choose from. So I assume at this early stage I need something quite simple (Though I assume that means I’m not going to get the most out of my savings)

A friend of mine who is a FA said he just does company pensions now and said I should get a Aviva/Standard Life/Norwich Union (can’t remember which one he recommended) stakeholder pension as the fees are low.


On a side point how would the monthly amounts work out to?
Say I’m on £40k before tax and NI. If I were to put in 5% and my company matched it: -
Is my monthly amount £166.66
My company £166
Plus tax back/savings? £?

Thanks.

£166.6 pcm is 5% of your gross salary so there won't be "tax back" above that amount. If you pay into an external pension, effectively you'd pay after-tax income of £133.33 and the £33.33 you paid in tax would then be added to the pension by the pension provider (the £33.33 would be your "tax back").

That's the gist of it, anyway. Within an employer pension scheme, you'd have £166.66 deducted from your gross pay, but you'd only see £133.33 reduction in your net after-tax income.

[All figures above are rough estimations; don't slam my maths or knowledge unless I am way off!]

xylophone

http://www.thisismoney.co.uk/money/experts/article-2387897/Will-employer-pay-contributions-personal-pension.html

The above might be of interest.

Even with a personal pension/stakeholder pension, you have to choose the funds in which you want your pension invested.

You/your employer could take the advice of an IFA - or you could try a call to HL?

http://www.thepensionsregulator.gov.uk/employers/the-essential-guide-to-automatic-enrolment.aspx

dave_smith14

I really appreciate all of the replies in this thread.

To be honest I’m still a little overwhelmed by the whole thing and which of the 3 (SIPP, stakeholder, personal) to go for. Would be allot easy if my company said this is who we’re with and I’d join that.

Reading the HL SIPP guide they said that if you’re putting in smaller amounts then a stakeholder is maybe the best option. So I’m leaning towards a AVIVA stakeholder (Low fees apparently) for the time being with the intention of getting something started and then readdress in the future.

AlanP_2

Could you get together with all / some of the other employees (who may also be confused) and deal (as a group) with an IFA to sort something out for you all?

dave_smith14

Problem is most have a pension set up already. I'm the stupid one waiting so long to start.

xylophone

http://www.moneywise.co.uk/pensions/managing-your-pension/the-best-pension-providers-2014

http://adviser.royallondon.com/technical-central/information-guidance/contributions-and-tax-relief/employer-contributions-and-tax-relief/

http://webarchive.nationalarchives.gov.uk/+/http://www.hmrc.gov.uk/manuals/remanual/re278.htm

might be worth a look.