Trying to set up a low set-up cost, low fee, zero transfer cost pension this tax year

chrisgeller

Hi,

I’m keen to become a member of a pension this tax year so that I have the option to use my £40k allowance for 2014/15 when I have time to get organised.

I’m not a member of any pension currently, so I’m looking for something very simple and quick with low (zero?) set-up fees, cheap passive management and that will be free to transfer.

Looking around, I’ve seen recommendations for something called the ‘Best Invest SIPP’ which doesn’t seem to have a set-up or transfer free, and as far as I can tell, charges 0.3% per year.

I’m not even convinced I need something as flexible as a SIPP. Would a stakeholder pension work better for my circumstances?

Triumph13

If the only objective is to secure the carry forward of annual allowance, the Aviva stakeholder has a minimum contribution of £20 gross lump sum and you can set it up through Cavendish for £35. so you can definitely be up and running for about £50.

dunstonh

so I’m looking for something very simple and quick with low (zero?) set-up fees

Which is virtually all them nowadays.

cheap passive management and that will be free to transfer.

Which is most of the decent ones.

Looking around, I’ve seen recommendations for something called the ‘Best Invest SIPP’ which doesn’t seem to have a set-up or transfer free, and as far as I can tell, charges 0.3% per year.

On top of the fund charges.

Would a stakeholder pension work better for my circumstances?

yes, but a personal pension is likely to be cheaper.

berbatov10

The personal pensions I have seen have a 1% fee ongoing which seems higher than other available options

jamesd

If you want cheap and easy you could go for the Virgin stakeholder pension. It'll take a contribution of as little as £1 and that'll be enough to make you a member of a pension scheme in this tax year and get you this year's annual allowance to carry forward.

It's percentage based charge for holding the money isn't cheap at 1% of the money held but 1% of £1 is irrelevant.

If you've ever been in a work pension and still have that old pension lying around somewhere with money in it you're already a member of a pension scheme and don't need to do this.

berbatov10

James I have an old friends life policy but am reluctant to put more into it as I am unsure of its performance

dunstonh

The personal pensions I have seen have a 1% fee ongoing which seems higher than other available options

With your fund value, you would expect personal pensions to be coming in at around 0.40% p.a. bottom line.

berbatov10

I have not seen one with charges that low, SIPPS are higher

redbuzzard

chrisgeller wrote: »

Hi,

I’m keen to become a member of a pension this tax year so that I have the option to use my £40k allowance for 2014/15 when I have time to get organised.

I know I'm answering a question you didn't ask, but by "allowance" you do mean the Annual Allowance for contributions? i.e., you are not assuming that you can set the contributions against prior years' taxable income?

You can get tax relief on the contributions under carried forward AA, but only against tax paybale in the year you contribute.

So if you contributed say £50,000 in 2015-16, using two years AA, you can set that against your earnings BUT to get higher rate relief on all of that you would have to earn c. £93k (i.e. have £50,000 of your earnings taxed at higher rate in the year you make the contributions.)

Don't forget in any case that you cannot contribute more than you earn in any year.

E&OE, just my understanding.