Setting up a personal pension

I-W

Hiall,

Washoping someone might be able to help me. I’m trying to set up a pension for OH (whodoes not have a work place pension and might be out of work or self-employedfor the next few years) and have a few questions.

Question1. On the government website https://www.gov.uk/tax-on-your-private-pension/pension-tax-reliefit says “It’s up to you tomake sure the tax relief you get isn’t worth more than 100% of your annualearnings” but then says “You may be able to claim tax relief on pensioncontributions if:” “someone else pays into your pension”. Does that mean if Ipay the contributions the pension company can claim tax relief at 20% directlyand pay into pension or not? Would we be liable to have to pay back to HMRC ifOH not earning enough that year? Does it matter if payment into pension comesfrom joint account?

Question 2. ObviouslyI understand that money invested in pension funds are not safe if theinvestments lose money, however is there something similar to the government bankguarantee of the first £85,000 with pension companies if the actual pensionprovider collapses? If so are they all covered or only certain ones?

Question 3. Otherthan the annual fee is there anything else I should be looking at in comparingproviders?

Question 4. Howdo I choose a provider? Any recommendation?

Thanks for yourhelp.

dunstonh

Question1. On the government website https://www.gov.uk/tax-on-your-private-pension/pension-tax-reliefit says “It’s up to you tomake sure the tax relief you get isn’t worth more than 100% of your annualearnings” but then says “You may be able to claim tax relief on pensioncontributions if:” “someone else pays into your pension”. Does that mean if Ipay the contributions the pension company can claim tax relief at 20% directlyand pay into pension or not? Would we be liable to have to pay back to HMRC ifOH not earning enough that year? Does it matter if payment into pension comesfrom joint account?

Basic rate relief is handled by the pension provider. Only higher rate is done by the pension holder with HMRC. it is important not to exceed the annual allowance or contribution limit for tax relief (if you dont earn enough). So, if you are unsure, pay a smaller amount in and wait until near year end and increment it then.

Question 2. ObviouslyI understand that money invested in pension funds are not safe if theinvestments lose money, however is there something similar to the government bankguarantee of the first £85,000 with pension companies if the actual pensionprovider collapses? If so are they all covered or only certain ones?

There is no government protection scheme on deposits. The FSCS is funded by the industry. A similar investment protection scheme exists for regulated investments. However, its less important as your actual investments are ringfenced and held under a trust. The insurer does not own your pension and cannot spend your pension money. If the insurer fails, it will mainly be an admin issue that will be the problem (delay in requests being actioned for example) and not your actual pension value.

Question 3. Otherthan the annual fee is there anything else I should be looking at in comparingproviders?

How you want to invest, what features you want. How easy is it to pay into the way you want to pay into it etc.

Question 4. Howdo I choose a provider? Any recommendation?

Recommending a pension type or product provider is a regulated activity. The board is not authorised to give regulated advice. It is discussion only. Even if we could, you havent given us enough to go on to say. However, as you intend to DIY, then you should research the providers and investments and make your decision from there.

atush

You can open a pension online if you want, but if you go the DIY route you need to be able and knowledgeable enough to choose your own investments.

How to choose the right provider will be a combination of the investments you want to put in the pension, and the amt you want to put in monthly to find the cheapest platform for you to use.

HL and Cavendish online are good places to start.

xylophone

If your spouse has no earned income, then there is a limit to the amount of tax relieved pension contribution that he can make (or you can make for him) - this is £2880 net (£3600 gross).

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If he is stopping/ starting/changing rate of contributions, a simple stakeholder might suit?

http://www.cavendishonline.co.uk/pensions/stakeholder-pensions/


http://www.legalandgeneral.com/pensions-retirement/stakeholder-pensions/

https://www.moneyadviceservice.org.uk/en/articles/stakeholder-pensions

I-W

Thank you all for your advice, trying to read a bit more into it but leaning towards Cavendish stakeholder pension.