Where to start...

TheGardener

34 year old niece - no works pension (never joined WPS - I know ...but its too late to worry about the past...)
Where to start for her?
Her working life is usually short/fixed term contracts of 6mth to a year or two for multiple employers - so - if I have £10k to start a pot for her what sort of pension do we go for? The plan is that she will continue to contribute to the pot from now on. She is not the sort who would be able to manage a portfolio/investment and really needs something simple/low maintenance.
TIA

Alexland

If she is being employed she may be entitled to a workplace pension with employer contributions under auto enrollment?

Stakeholders tend to be the simplest pensions for small lump sums and regular contributions. In particular the Aviva stakeholder (available via Cavendish for a small setup fee) is low cost, has a good default fund and very easy to operate using the standard MyAviva insurance logon:

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

https://www.aviva.co.uk/stakeholder-pension/

Remember pension contributions including tax relief are limited by earnings in each tax year so if her earnings are below £10k then you may need to put the money in over multiple years.

Also worth considering a S&S Lifetime ISA (for up to £4k per tax year) which offers the same 25% boost but there is no tax on withdrawal at age 60+. However they are more complicated than a stakeholder pension. Still if her pension never gets big she may not pay tax in retirement anyway.

Also worth her checking her NI record incase her work pattern has caused some incomplete years which could still be topped up to improve her state pension?

Alex

xylophone

She can check her state pension.

https://www.gov.uk/check-state-pension

https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

TheGardener

Thanks for these suggestions. She could join her work place pension but there is no security - at the moment she is only guaranteed work until September. The flexibly to stop/lower/increase contributions depending on work would be good.

I've sent her off to check her NI contributions - If there are gaps in the NI then if we pay to fill the gaps out of the £10K and put the remaining cash into a stakeholder - would be the best way forward?

Flying_Dodo

I'd avoid stakeholder plans, as they can have higher charges than standard personal pensions. As well as possibly having other restrictions such as limited investment funds, no drawdown option in retirement etc.

dunstonh

Free money is free money whether it is for 6 months or 6 years.

If you had someone who changed jobs every 6 months, then they would never join a scheme and would miss out on a work lifetime of free money from the employer.

Many individual schemes will not accept new pension applications from opt outs.

and put the remaining cash into a stakeholder - would be the best way forward?

Stakeholder pensions became a niche option from around 2005 onwards. They are largely obsolete for most people and really only suited for very small premiums or grandchildren/children or a couple of other areas.

xylophone

If she joins the workplace pension, it may be possible for her to continue to contribute after she leaves.

Example

https://www.nestpensions.org.uk/schemeweb/NestWeb/public/memberhelpcentre/contents/what-happens-to-my-nest-pot-if-i-change-employers.html

kidmugsy

TheGardener wrote: »

She could join her work place pension but there is no security

Saying that you won't join the pension scheme because the job isn't long term is as daft as saying you won't accept the pay because the job isn't long term.

Alexland

TheGardener wrote: »

She could join her work place pension but there is no security - at the moment she is only guaranteed work until September. The flexibly to stop/lower/increase contributions depending on work would be good.

Employer contributions are still free money and small workplace penions can be transfered into a longer term main pension account such as a stakeholder whenever she leaves a job.

I agree stakeholders might not be particularly modern however they are much simpler to manage than most SIPPs (e.g. no cash balance or complicated fee structure to worry about) and although you cannot choose from thousands of funds the default fund should be fine for most people. The cost of the Aviva scheme (which covers both platform and fund) is only very slightly higher than the cheapest SIPPs plus multi asset funds in the market. We have one for my wife who is happy with it - she wouldn't be happy with my more complicated SIPP. Sure they don't offer drawdown but that might be more complicated than many people can manage and she could always transfer to a different provider at the end of the accumulation phase (there are no exit charges) as the market will have changed by then.

TheGardener wrote: »

I've sent her off to check her NI contributions - If there are gaps in the NI then if we pay to fill the gaps out of the £10K and put the remaining cash into a stakeholder - would be the best way forward?

When she gets the information it will say how many additional years are required for a full state pension then compare it with how many she is realistically going to work and make NI contributions. Then decide if filling in any gaps will be useful. For the next 9 months she can buy NI gaps going back to tax year 2006/07 at a particularly attractive price.

Alex.

atush

34 year old niece - no works pension (never joined WPS - I know ...but its too late to worry about the past...)

Start the works pension NOW.

She could join her work place pension but there is no security - at the moment she is only guaranteed work until September.

She doesnt need security- she needs the money she is throwing away by not joining? After she leavess she can transfer the owrk pesnion to another work pension or a personal pension. Which means she will be harvesting Free Money fromher employer until then.

TheGardener

Thanks for all you replies. Simplicity of management is a key factor.
She checked at work today but they said the administration involved for her to join now with just 3 months remaining on her contract was pointless. She can't be that unusual these days in only being able to access short term contract work? I sort of wondered if there was some sort of simple portable pension pot you carried around to each employer but that seems unlikely from what folk have said.
Her NI contributions are actually pretty much full although the amounts per year vary quite a lot.
She has promised that she will join whatever work place pension is available with the next contract but based on her previous work history - if the future is more of the same its going to get increasingly difficult to keep track of multiple tiny pension pots.