Intermittent/variable pension contributions

lazza_w

I am 34 and have one pension which I contributed £250pm into when I first took it out 10 years ago. When I got married and bought a house 7 years ago I reduced this to £30pm. Life (house renovations, children etc) got in the way and I never got round to increasing my contributions due to insufficient free money.

I am now at a point where I am able to increase my pension contributions again. I have a regular salary, which has no spare to save, but also have a salary bonus scheme which I can plough into my pension. The bonus is paid quaterly and varies between £600 and £1200 each time after tax. My basic salary is £37000pa (gross)

I could set up a pension and pay in £200pm and put the rest into other savings, but I really want to put as much into my pension as possible to make up for the poor savings in the last 7 years.

Do pension providers let you pay quaterly and vary the amounts each time? If so it this offered by all companies or just a few?

Thanks in advance

EdInvestor

Have a look at a SIPP.

https://www.h-l.co.uk
https://www.sippdeal.co.uk

Better suited to lump sums, offer much better investment options and flexibility, plus potentially lower costs.

dunstonh

plus potentially lower costs.

plus potentially higher costs.

The FSA have again in the last week issued warnings that SIPPs are being overused and that they intend to take a closer look at it. This time they have focused on SIPPs using investment funds. It even brought a response from HL. Probably as the majority of their SIPPs go into funds. Personally, I think they the FSA are focusing on charges too much and not quality. We dont all want cheap rubbish but I do understand their concerns when people not suited to SIPPs use them and pay a lot more than they would compared to a stakeholder pension.

Do pension providers let you pay quaterly and vary the amounts each time? If so it this offered by all companies or just a few?

Most modern pensions are flexible. Stakeholders especially.

EdInvestor

The FSA's concern relates to advisors suggesting SIPPs because they pay higher commission.

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=424729&in_page_id=6

But the two companies whose links I've supplied operate on an "execution only" basis, ie no advice is supplied, so this issue does not arise.

dunstonh

The FSA's concern relates to advisors suggesting SIPPs because they pay higher commission.

http://www.thisismoney.co.uk/retirem...9&in_page_id=6

There is not a single mention of commission in that article. So, why try and turn it into that?

But the two companies whose links I've supplied operate on an "execution only" basis, ie no advice is supplied, so this issue does not arise.

The two companies you promote charge more than a stakeholder pension. HL get trail commission of upto 0.75% yet on a stakeholder pension an IFA would get 0.4% p.a. It's no wonder they want to promote SIPPs over stakeholder when they can make nearly double the money on it.

Just look at the misinformation in this article:

The Hargreaves Lansdown Vantage Sipp has no set up cost or annual fee – savers only pay discounted charges for the underlying funds. If you invest in more peripheral assets such as individual shares, the fee is capped at either 0.5% or £200 a year. Sippdeal has a similar offering – it charges a flat set up fee of £100 with no additional Sipp charges. Stakeholder pensions generally charge an annual management fee of 1.5% for the first 10 years and 1% thereafter.

Do you see any mention of the 1.5% typical annual management charge that HL have on the funds available on the pension? No. Of course not because they are not comparing like for like.

HL are SPINing the information worse than you do.

The FSA say : Our review highlighted the potential risk that Sipp recommendations may be based on access to a broader range of packaged investment funds than under their previous arrangements, rather than because the Sipp provides self-selection of actual investment assets. Under these circumstances, a stakeholder pension or personal pension may equally satisfy a customer's needs, potentially at a lower cost.

So, why are HL giving their charges on alternative investments and not funds despite an estimated 90% of their SIPPs investing into funds. The very thing the FSA are concerned about.

Take out a SIPP with HL and your annual management charges are going to be around 1.5% p.a. A stakeholder on execution only basis will be around 0.6% p.a.

HL have a financial interest in making SIPPs work as they make a fortune out of it. They are quite skilled at using the media as you can see.