self emplyed pensions options?

oceanblue_3

Glad you're sticking with the thread!

I think it would be a good idea for you to have a look at this website -http://www.sorted.org.nz/ - it's sponsored by the New Zealand Retirement Commission and is designed to help people make good decisions about all sorts of financial issues.
I still think it would be good for you to speak to an independent financial adviser - most of the IFA's I know would charge nothing for an initial meeting, and there would be no obligation placed upon you to take matters any further.
The MoneySavingExpert website is excellent in many respects, but planning for an income in retirement is different for everyone, it can be complex, and certainly benefits from the assistance of a friendly professional.
Good luck!

EdInvestor

cyclops wrote:

basically what i want to do (i think?) is be secure in my retirment

Just checking cyclops, you are buying yourself a home, are you? Having a home free of mortgage is perhaps the main basic need for a secure retirement.

Having a pot of money in a pension or whatever is the second main requirement and you've already made a very good start there with the council pension, one of the best ones.

And the third is sorting out the basic state pension, which you'll have to do yourself now you're self employed.

sneekymum

Don't forget those lovely Tax Credits!

If you've got children under 18 no doubt you'll be getting Tax Credits. It would be best not to consider ISAs until you've had your maximum contribution into a pension as you can use this to reduce your earnings on the Tax Credits form. You get 37p back for every pound you reduce your earnings through a pension contribution.

That's in addition to the 22% tax back...

Debt_Free_Chick

dunstonh wrote:

No.

They are the same thing from a working point of view. The only difference is that the stakeholder pension has a certain charging method which cannot be breached. A personal pension has a more flexible charging method with no rules on the maxium.

OK, I was being a little mischevious with my previous comment, from the point of view of pension regulations, then there is no difference between a personal pension and a stakeholder pension i.e. the rules on what you can pay in and when, and what you can take out and when, are the same. So they are essentially the same product, but with different bells & whistles ... which are likely to be priced differently.

Regards

cyclops

Editor wrote:

Just checking cyclops, you are buying yourself a home, are you? Having a home free of mortgage is perhaps the main basic need for a secure retirement.

Having a pot of money in a pension or whatever is the second main requirement and you've already made a very good start there with the council pension, one of the best ones.

And the third is sorting out the basic state pension, which you'll have to do yourself now you're self employed.

i/we are buying our house and have 13yrs left on it till paid up (took it over 20 yrs)
so that is in hand

obviously the council one is now frozen as i dont work there any more

i am allready registerd with NI to pay my contributions (£2.10 per week) just waiting on my D.D. form to arrive so at least my state pension is sorted (if its still there at my retirment)

EdInvestor

Hi cyclops,

Personal pensions with no employer contributions tend not to be a very good deal for basic rate taxpayers. So if you are one of those, and because you already have 15 years in a top class index linked guaranteed scheme plus the state pension, also index linked, I would suggest you save in ISAs not pensions.This will mean you will build up a more flexible fund which you can access.It covers you for instance if you inadvertently founds yourself in unplanned early retirement/redundancy/unemplyment at the age of say 50 or 55, before your main pensions would kick in.

You can choose a selection of funds to put the contributions in, such as an equity income fund (with income reinvested) and a property fund (ditto).A discount broker like https://www.cavendishonline.co uk (rec by MSE) would set you up such an ISA, rebating initial charges.Later on, if you want to after the rules change next year, you can sweep the money into a pension in a lump sum.(Remember that you pay tax on 75% of the pension when you get the income after retirement, but with an ISA the tax is already paid so the proceeds are tax free, and you can take all the money if you need to, unlike a pension which is restricted.

If you are a higher rate taxpayer then the personal pension is a better deal as you get more tax relief as you pay in, and because most people pay basic rate tax in retirement, you pay less at the other end.

I think dunstonh has a suggestion for a good pension scheme from Scottish Life you might like to look at if you're in the higher tax rate group.

dunstonh

Personal pensions with no employer contributions tend not to be a very good deal for basic rate taxpayers.

Codswallop. You cannot come out with a statement like that as it is clearly incorrect.

I'm sorry editor but this is dangerous talk and really should not be worded in the manner. Some people may read that and think you are right and not do any retirement planning.

ISAs and pensions are both suitable products to be used for retirement planning. Both have their pros and cons. Depending on whether the pros or cons work for or against you, you can decide for yourself what option is best. A combination is often the usual answer if you do want to deal in generalisations.

.(Remember that you pay tax on 75% of the pension when you get the income after retirement, but with an ISA the tax is already paid so the proceeds are tax free, and you can take all the money if you need to, unlike a pension which is restricted.

Not all of the 75% may be taxable. You have an increased personal allowance after age 65 and then the 10% tax band. A couple looking at their retirement should look at both of them and not go top heavy with one of them. If both utilise the personal allowance, then that is 14k (in todays) per annum tax free. So a basic rate tax payer can easily pay into a pension, get tax relief and pay no tax in retirement.

Pension contributions can also reduce your earnings for working/childrens tax credits allowing you to receive more of those meaning in effect, you are getting more than 22% tax relief.

oceanblue_3

I agree - if you go to this website, you'll find more of the same https://www.investorsassociation.org.
Tripe like this doesn't help to educate MoneySavers, it helps to make them cynical. I'd like to hear more about Editor's formal credentials.

EdInvestor

dunstonh wrote:

ISAs and pensions are both suitable products to be used for retirement planning. Both have their pros and cons. Depending on whether the pros or cons work for or against you, you can decide for yourself what option is best.

That's right.That's what I said - in this case I suggested an ISA might be a better idea.

Don't see what your problem is.We are saying the same thing.

EdInvestor

So a basic rate tax payer can easily pay into a pension, get tax relief and pay no tax in retirement.

This wouldn't apply to anyone who was getting the full basic state pension (never mind S2P) surely?