Help with gf pension

Jaguar_Skills

Hi all,

I am a bit lost with what to do for my girlfriends pension.

A few details which may help:

-She is 33

-She is currently self employed with a ltd company.
-about to go on maternity

-she will have about £7,000 left over following her ceasing work which we would like to deposit into a pension (which she does not yet have)

We have had a meeting with a pension provider near to us who want to charge £500 to set this up which seems rather high given the nature of the deposit.

The benefit of her making this payment is I guess for a few reasons but mainly her accountant I think can back date the payment to offset the tax that she will pay and also hopefully we will get some compound returns over the few years she will not be working. She can then start contributing to it if and when she returns to work.

I am not hugely clued up on pensions, I have been contributing £600 per month (50:50) to Vanguard Life Strategy 80 and Blackrock Consensus 100 over the last couple of years into Cavendish which at the time was low cost.

My question really is would something simple like that be a good idea for a one off deposit or is it more risky because it is not being drip fed?

If anyone can help that would be most appreciated. If anyone has any questions that they need further info on please fire away!

TIA :beer:

greenglide

She is currently self employed with a ltd company

So she's not self employed, she is employed by her company.

She should probably pay the contributions from the company, not as personal contributions. Is the money still within the company?

Jaguar_Skills

At the moment yes it is. Could you explain further?

Dazed_and_confused

The benefit of her making this payment is I guess for a few reasons but mainly her accountant I think can back date the payment to offset the tax that she will pay and also hopefully we will get some compound returns over the few years she will not be working. She can then start contributing to it if and when she returns to work.

I think your gf should seek further information from the accountant about this as it is a long long time since you have been able to back date (carry back) pension contributions. Anything paid in this tax year will only have an impact on her tax bill in this tax year and if she is about to stop work, 1 month into the tax year, to go on maternity, there is a very strong chance it will not benefit her personal tax position at all.

Personal pension/sipp contributions are beneficial tax wise (from your gf''s personal tax position) if you are a high rate (or additional rate) payer. If not paying tax or she's a basic rate payer then there is no tax benefit over and above the basic rate tax relief which would be added at source into the pension fund by whichever provider she chooses.

It may be you are confusing your gf's tax affairs with that of her company and the accountant is talking about something else entirely but the fact that you refer to your gf as currently self employed with a ltd company. suggests you need to get more advice from someone you trust before parting with any money.

Jaguar_Skills

I may be mixing my words but surely it is fairly obvious isn't it? She gets paid a day rate which gets paid to her company which she is the sole person in.

molerat

The distinction is very important for taxation and pension purposes. If her company gets paid by the client and she gets paid by her company then she is not self employed, it does not matter if the company has one or one thousand employees. It can be very tax beneficial for the company to pay her pension contributions.

Jaguar_Skills

Sorry yes it will be being paid by the company, I was getting confused. What I was really after was some advice as to where best to place this without having to spend fortunes on fees.

xylophone

For a modest SIPP, HL might suit.

Otherwise, you are familiar with Cavendish and she could choose one of their options?

CFrog

I'm in a similar position to your GF in that I am a business consultant working through my own limited company.

It's a fairly typical model: I am a Director of the company and work on a day rate basis for clients. I do the work, my company bills the client; the client pays my company; my company pays me a salary and dividend(s).

My company also makes pension contributions into a SIPP I set up with Hargreaves Lansdown. I make these payments either by direct debit or one-off contributions as company funds permit.

It was really east to set up the HL SIPP; it takes about 10 minutes. (I have a separate one with A J Bell that was just as easy to set up). I wouldn't bother paying for advice to set up the pension but you may need some advice on what to invest your GF's money into tho'.

Once the SIPP is set up you simply send HL a COMPANY cheque under a covering letter signed by a Director of the company (your GF) stating what SIPP the money is to be paid into.

Once the money is credited to your GF's SIPP, you could pay HL for advice on investing the funds but again I wouldn't do this. I would seek advice from the many knowledgeable folk that contribute to this forum.

Hope that helps.

Jaguar_Skills

Thanks CFrog that is really useful. I think something simple would be best to invest in but really not sure how to find out abotu that. Maybe a review of monevator again!

CFrog

As suggested, I would invest the money yourself. It's cheaper and you never know, you may 'get the bug'. Either search the forum for threads where people have sought advice on investing similar amounts themselves or open up another thread on the forum yourself and see what comes back; you'll be surprised !.

Set out your circumstances (age / maternity leave / need to invest for a couple of years / low risk / other investments or pensions she may have - stuff like that) and ask for suggestions.

Good luck.