To Sipp or not to Sipp?

hermionesaver

:hello: I'm new here but I have been browsing for a few months. I haven't found a thread that completely answers my questions so I thought I'd start one.

Basically I am a 26 year old mum of 2 young children. I work 5 hours a week at minimum wage (sometimes get commission on top) and I am also self employed but my business is a new one and not bringing in a profit yet so no income from that at the moment. I get a bit of extra income from switching bank accounts, selling online, odd jobs, stoozing etc.

I had my first child straight after I graduated from uni so I've never had a 'proper' full time job and no pension scheme. I am wondering if I should start a Sipp or if it's not worth it at this point in my life?

I currently have:
HTB ISA (£200 a month - but may have to reduce this soon as work hours have gone down)
S&S ISA with Scottish Friendly (only £10 a month - ring fenced for retirement atm)
Regular 6% saver (£25 a month)

Now I don't have much spare income to put into a Sipp but I was thinking of using any lump sums I may get (b-day/xmas presents/commission).

My employer does offer a pension with quite a low rate of matched contributions but I am hoping to leave as soon as my business can pay my current wage so I don't think it's worth opening one with them.

Another option would be to use the new LISA if/when they become available but I would probably use that for a house deposit sometime in the next few years and then would be back to zero in that account.

I have a little knowledge about stocks & shares so I feel I would be able to invest fairly sensibly. My DH has been investing for a few years in his S&S ISA and has done fairly well so I can always ask him for advice on investments too.

Just wondering what others would do in my position? I'm starting to feel a bit worried about having no retirement savings!:eek:

jamesd

Unless your employer is using NEST or it's a final or average salary or other type of defined benefit pension you'll be able to transfer it once you leave. Might as well take their matching while it's available.

hermionesaver

jamesd wrote: »

Unless your employer is using NEST or it's a final or average salary or other type of defined benefit pension you'll be able to transfer it once you leave. Might as well take their matching while it's available.

Ah ok, it's definitely not a final or average salary scheme. I've not heard of NEST so I'll have to read up on the details of what it is. I think it's just a bog standard one as I work in retail.

jamesd

So far as other money goes, use the things for house buying. They will make you more in reduced costs and better quality of life than paying in to a pension beyond what your employer will match.

hermionesaver

jamesd wrote: »

So far as other money goes, use the things for house buying. They will make you more in reduced costs and better quality of life than paying in to a pension beyond what your employer will match.

We do already live in a house 'we' (my husband) owns. I'm not on the mortgage as I wasn't working when 'we' bought it. I am technically still a first time buyer so paying in to a HTB ISA/ saving for deposit. Hopefully our next house move will be to our 'forever' home so we will need a hefty deposit.

dunstonh

I've not heard of NEST so I'll have to read up on the details of what it is. I think it's just a bog standard one as I work in retail.

Nest is a product provider. Their name would appear on the statements etc.

There is no such thing as a bog standard one.

S&S ISA with Scottish Friendly (only £10 a month - ring fenced for retirement atm)

Expensive and poor quality. Although its only £10 so barely worth the effort but you may want to look at that as well.

hermionesaver

dunstonh wrote: »

Nest is a product provider. Their name would appear on the statements etc.

There is no such thing as a bog standard one.



Expensive and poor quality. Although its only £10 so barely worth the effort but you may want to look at that as well.

It's not a NEST one then. I think it's either Aegeon or Legal & General. I haven't signed up for it yet so no statements.

I know Scottish friendly isn't the best but I signed up to it partly because of a good deal on topcashback and partly just to be locking away a little amount every month where I can't touch it. It's a UK tracker fund one so hopefully I should be getting a bit more for my money than I would have a few months ago as a lot of things have dropped after Brexit. It's locked away for 5-10 years with 10% rise a year and option to put in lump sum. I have deposited £110 so far. I will think about moving it to a different S&S ISA 5 years.

I know £10 a month isn't much but I don't have much of an income so it's better than nothing for now.

edinburgher

I know Scottish friendly isn't the best but I signed up to it partly because of a good deal on topcashback

This is a really poor reason to be tying yourself into an expensive provider for 5+ years. I'll not lie and say that I've never opened a S&S ISA for a good chunk of cashback (seem to recall a £100 Fidelity one some years ago), but that was basically along the lines of an account switching offer (i.e. 2-3 month commitment to get the cashback).

dunstonh

I know Scottish friendly isn't the best but I signed up to it partly because of a good deal on topcashback and partly just to be locking away a little amount every month where I can't touch it. It's a UK tracker fund one so hopefully I should be getting a bit more for my money than I would have a few months ago as a lot of things have dropped after Brexit. It's locked away for 5-10 years with 10% rise a year and option to put in lump sum. I have deposited £110 so far. I will think about moving it to a different S&S ISA 5 years.

Do not buy investments on marketing gimmicks. Who do you think pays for the gimmicks?

Scottish Friendly marketing is not compliant with current rules. It still uses the AMC in its literature but it should be using the OCF (FCA Thematic review TR14/7). Your plan has a reduction in yield of 1.6% a year due to charges declared as 1.5% AMC. That is high. Especially for trackers. Your amount is not viable for an IFA but on DIY, you are paying around 3 times more than you should aiming to be. You are probably paying more as the AMC is lower than the OCF with most funds but because of the poor disclosure documents from Scottish Friendly, it is not possible to say.

I know £10 a month isn't much but I don't have much of an income so it's better than nothing for now.

In which case, a savings account, such as a regular saver would almost certainly be a better option.

hermionesaver

dunstonh wrote: »

Do not buy investments on marketing gimmicks. Who do you think pays for the gimmicks?

Scottish Friendly marketing is not compliant with current rules. It still uses the AMC in its literature but it should be using the OCF (FCA Thematic review TR14/7). Your plan has a reduction in yield of 1.6% a year due to charges declared as 1.5% AMC. That is high. Especially for trackers. Your amount is not viable for an IFA but on DIY, you are paying around 3 times more than you should aiming to be. You are probably paying more as the AMC is lower than the OCF with most funds but because of the poor disclosure documents from Scottish Friendly, it is not possible to say.



In which case, a savings account, such as a regular saver would almost certainly be a better option.

Well the Scottish Friendly ISA is up and running now and as I say I wanted to put the money somewhere I wouldn't be able to touch it. I was looking for something for the long term. I do have a regular saver in which I save £25 a month.

I started this thread to ask about Sipps. What I have gleaned so far from the limited discussion on pensions is that I should start a work place pension even if it is just for a couple of months and then transfer it to a Sipp.

Does anyone have any advice about what Sipps are the best? I was looking at the X-O one.

hermionesaver

edinburgher wrote: »

This is a really poor reason to be tying yourself into an expensive provider for 5+ years. I'll not lie and say that I've never opened a S&S ISA for a good chunk of cashback (seem to recall a £100 Fidelity one some years ago), but that was basically along the lines of an account switching offer (i.e. 2-3 month commitment to get the cashback).

Yes I realise this but the £100 was very tempting and I will use it towards my house deposit. It's better than just spending the money which is what usually happened before I opened it.