Stakeholder or Personal Pension?

jul1e

I have decided to opt out of the NEST auto-enrolment scheme following the good advice received on the forum and am going to set up a stakeholder or personal pension to supplement my deferred pension from teaching. I have been trying to educate myself about these and it is my understanding that a stakeholder is best for smaller contributions and has fixed charges.
My situation is that I have 6 years to go until I am 60 when I hope to retire. I would hope to pay in between £80 and £100 per month. I could possibly pay in a lump sum of £1000 initially but might have to pay the lower amount monthly. Can I set up a pension like this myself from say Standard Life or Scottish Widows and be reasonably certain that it is a good product, or should I see a Financial Adviser? I have looked at some information about IFAs on the unbiased website but they seem to deal will much larger pension amounts than I will have. What kind of charges would an IFA be likely to make?
Also, I would like to have an ethical product. Is this possible or am I being naive?

xylophone

Had you looked at Cavendish?

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/

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

dunstonh

Can I set up a pension like this myself from say Standard Life or Scottish Widows and be reasonably certain that it is a good product, or should I see a Financial Adviser?

Neither offer a great option. Although both of them limit the damage you can do if you get it wrong. From memory, SW will not accept pension applications from opt-outs unless an IFA agrees to it.

What kind of charges would an IFA be likely to make?

As you are an opt-out, you would need a pension transfer specialist IFA. I suspect it would be unrealistic to employ on IFA in your case.

Also, I would like to have an ethical product. Is this possible or am I being naive?

Ethical is possible but it depends on your ethics. i.e. the investment funds may meet your ethical criteria but the pension provider won't. Plus, ethical funds tend to be more expensive and perform lower. So, you really would be putting your money where your mouth is. You can forget about looking at the likes of Std Life and SW on their stakeholder pensions too.

jul1e

Thank you for your replies. I will look at some more providers. The NEST pension is provided through a payroll company and as it's a really small amount (1% of pay and no employer contribution) I didn't think it was worth staying in if I start another pension as there would be charges as well. However, if it causes problems by opting out maybe I should just leave it. (It hasn't actually started yet, but it seems I have to be opted in before I can opt out).

If it's unrealistic to employ an IFA would the Pensions Advisory Service be of any help? Or should I just choose a pension from a well known provider and hope it performs reasonably well? I do understand it's not going to be anything amazing for quite small contributions over only 6 years.

I would like to have ethical funds if possible, avoiding particularly human exploitation and animal testing of cosmetics etc.

dunstonh

f it's unrealistic to employ an IFA would the Pensions Advisory Service be of any help?

No. That is not their remit.

Or should I just choose a pension from a well known provider and hope it performs reasonably well?

NEST may be a good option if you drop the ethical requirement.

I would like to have ethical funds if possible, avoiding particularly human exploitation and animal testing of cosmetics etc.

Then you are probably at a SIPP. A more complicated option. I emphasise again... are you really sure you want ethical investments?

greenglide

The NEST pension is provided through a payroll company and as it's a really small amount (1% of pay and no employer contribution

Presumably the payroll company will deduct the employers contributions from your salary before tax, employers NI andand employees NI in a similar way to which employers NI must be handled.

If this is the case then you are getting tax and NI relief on this. If this is not the case how, exactly, is the employers NI paid by you?

Do you have the option of working with your own Limited Company instead? This does have advantages in these circumstances.

xylophone

If this is the case then you are getting tax and NI relief on this. If this is not the case how, exactly, is the employers NI paid by you?

See https://forums.moneysavingexpert.com/discussion/comment/73002100#Comment_73002100

She is a supply teacher working for agencies using "umbrella company"

arrangement.

https://www.teachers.org.uk/sites/default/files2014/supply-teachers-umbrella-limited-companies-2016.pdf

xylophone

I would like to have ethical funds if possible, avoiding particularly human exploitation and animal testing of cosmetics etc.

Hargeaves Lansdown are not the cheapest platform but their website is very easy to use and administration excellent.

You might consider a SIPP choosing "ethical" funds.

http://www.fundexpert.co.uk/research/news,best-ethical-funds-for-your-isa_846.htm




http://www.hl.co.uk/funds/research-and-news/fund-sectors/ethical

greenglide

She is a supply teacher working for agencies using "umbrella company" arrangement.

Yes, I had seen the previous thread. The NUT document is interesting but it doesn't actually go into the depths of who actually calculates the employee and employer NI and declares them to HMRC.

When calculating that liability the employers NI and the employers pension would have to be deducted from the gross pay before all deductions.

This would give relief on the employer deductions.

xylophone

Yes, I had seen the previous thread. The NUT document is interesting but it doesn't actually go into the depths of who actually calculates the employee and employer NI and declares them to HMRC.

See

https://www.nasuwt.org.uk/uploads/assets/uploaded/225530a0-40e3-4b09-bc5fa859191909b0.pdf

jul1e

Thank you for your replies.

I am looking at the different options suggested. I spoke to the umbrella company today to try and clarify a few points about the NEST option. To be honest they don't seem to have a great understanding of it themselves as they are only starting it from September. Contributions don't start until earnings are above a certain threshold. They will start at 1% and may rise in future years.They also told me there are no charges but when I looked at the NEST website there are charges of 1.8% of contributions and 0.3% AMC.
Contributions are made before tax but NI deductions are taken from gross pay so they remain the same.

I would like to have ethical investments if possible but I don't think a SIPP is appropriate for me. Some of the pension providers do have ethical options for their stakeholder pensions. If opting out of NEST would stop me being able to set up a stakeholder pension then maybe I could just leave the NEST going with the minimum contributions.

The umbrella company situation is a difficult situation. The agencies cannot legally force you to work through an umbrella company but in reality they do as if you insist on being paid directly they are unlikely to source you any work as it would cost them more. The daily rate that is paid is supposed to include an amount for employers NI. The rate I am paid is quite good compared with what some other agencies pay, although it is well below what would be paid if working directly with a school.( I have been threatened with a pay cut though - for daring to ask for a pay rise!). I will investigate forming a Limited Company to see if this is a viable option for me.