How Much Would You Pay For Pension Advice?

MightyMythop

My better half is an IT Contractor and being self-employed is looking at starting a pension after several years of being in her workplace scheme.

She's shopping around for IFA's to help her out but most don't disclose their fees other than if it's a lump sum investment (eg 3% of the lump sum and 0.5% ongoing fees), which in her case it will be c£200pm.

What can she expect to pay as an upfront fee (surely not 3% of £200!?) and presumably the ongoing fees would still apply?

Also, what would you think is a reasonable fee to pay?

Thanks

greenglide

If she is an "IT Contractor" she is not allowed to be self employed. She is either employed by an "umbrella company" (common after IR35), employed by an agency (seen as "agency staff" rather than "real" contractors) or employed by a limited company which she is also the sole or major shareholder.

It makes a huge difference. Her own limited company can pay into her pension scheme before corporation tax, income tax or NI (both employers and employers).

MightyMythop

This is true! She is a Ltd Company......I live in the old world that when you work for yourself you are self-employed.

So she can set up her own workplace pension then? I know there are schemes such as NEST out there but if she wanted to proper advice?

dunstonh

She's shopping around for IFA's to help her out but most don't disclose their fees other than if it's a lump sum investment (eg 3% of the lump sum and 0.5% ongoing fees), which in her case it will be c£200pm.

Lump sums are against lump sums. not regular payments. It is not possible to to charge against regular payments beyond 12 months.

Also, what would you think is a reasonable fee to pay?

Depends on the complexity. Anything from £500 to £1500 typically.

However, as she is not self employed but employed as a director through a limited company. This can bring auto-enrolment in to play. Although if she is director and there are no employees then she does not have to comply with auto-enrolment.

TheTracker

If she owns a Ltd company then it is as simple as opening a SIPP account at an investment platform in her name, declaring on any contribution form that the money is arriving gross from an employer, and the limited company transferring any monies to her investment SIPP account. Simple as that.

I personally wouldn't go near an IFA with a very large barge pole but different people have different needs.

xylophone

http://www.contractorcalculator.co.uk/pensions_contractors_limited_company.aspx

http://www.thepensionsregulator.gov.uk/docs/pensions-reform-employer-duties-defining-workforce-v4.pdf

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

https://www.unbiased.co.uk/

may be worth a look.

mania112

greenglide wrote: »

If she is an "IT Contractor" she is not allowed to be self employed.

Although it turns out you were right, how did you know she wasn't self-employed just by the title of IT Contractor?

greenglide

Because trading as an IT contractor is illegal if you are truly self employed. This rule was brought in way back in the 80s I think. It was initially to prevent people claiming to be self employed and then "omitting" to pay the tax and NI on the income. I think IT was the only sector where they did it this way.

This is enforced by the contract agencies as they and the employer would fall foul of HMRC if they don't.

Of course all that happened was that everybody set up limited companies and paid themselves through dividends rather than salary, employed their wife / husband / partner if they were not a tax payer, the partner had 50% of the shares etc. There was also money to be made on VAT as it was paid quarterly so we had the money earning interest during that period (interest rates were higher then).

Then along came IR35 .......................................