Personal Pension - Self Employed Freelance Options

BathMoney

I am married, 46 self-employed with a minimal income (£7,000 PA). I want to save and perhaps also put some money into a pension.

I haven’t added anything to my old policy (from my then employer) in some time, the current value of the policy in 2018 was Circa £22,000. I stopped contributing to this as I became frustrated (perhaps wrongly) with the policy not performing as I would have liked and the annual gobbledygook and lack of straight answers to straight questions. I don't want to take charge of investment decisions but leave this to experts.

It seems to me that hiring a financial advisor would not be possible with the money I have available. I have read through some of the articles on pensions online and on MSE. I like the idea of Nest and the pensions (Or Sipps) provided by Hargreaves Lansdown.

I am thinking of contributing £100 to £200 PCM into a new pension policy, but want the flexibility to stop if I have too.

Given the state pension is it worth me bothering with a separate pension given my current income level. If not at what level of earnings should I start thinking of a personal pension?

I have recently received a £10,000 sum, due to the sale of a website I developed. Should I consider adding £7,000 or so to a pension to enjoy tax relief, or are lump sum deposits generally ill-advised?

Should I transfer my old pension to my new provider? What should I look for to make this determination?

Given my current reliance on the state pension. Is there anything I should check to ensure state pension is in place as it should be?

dunstonh

I stopped contributing to this as I became frustrated (perhaps wrongly) with the policy not performing as I would have liked

How would you like it to perform and what was this one doing wrong?

and the annual gobbledygook and lack of straight answers to straight questions.

Pensions dont answer questions. People do. If the questions are of a nature that requires a regulated individual to answer them then providers cannot answer the question as they are not authorised to do so.

Most of the annual gobbledygook is a result of EU legislation and people generally calling for more info.

I don't want to take charge of investment decisions but leave this to experts.

That is the job of an IFA. Have you got an IFA or spoken to an IFA?

It seems to me that hiring a financial advisor would not be possible with the money I have available. I have read through some of the articles on pensions online and on MSE. I like the idea of Nest and the pensions (Or Sipps) provided by Hargreaves Lansdown.

Nest is not an adviser and gives no investment advice (and would suffer the same issues you had before - hence the need to understand what those issues are).

HL is non-advised but you can pick from the 30,000 or so options available on a SIPP.

Given the state pension is it worth me bothering with a separate pension given my current income level.

What is your household spending like? What do you plan for in retirement? How are you going to pay for it? What other household income will there be in retirement?

I have recently received a £10,000 sum, due to the sale of a website I developed. Should I consider adding £7,000 or so to a pension to enjoy tax relief, or are lump sum deposits generally ill-advised?

You can only pay in £7000 in your case in this tax year. If it is suitable to do so then you can do it. if its not suitable then you shouldnt. Not enough to go on here.

Should I transfer my old pension to my new provider? What should I look for to make this determination?

If it is suitable to do so then yes. If its not then you shouldnt. You need to analyse and compare. Or use an IFA to do it for you.

Given my current reliance on the state pension. Is there anything I should check to ensure state pension is in place as it should be?

You can get an online state pension forecast which includes telling you the years you qualified. It will show any gaps if there are any.

AlanP_2

You can check your SP situation here, and your spouses:

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

What disappointed about the current scheme? If you are not going to use an IFA (and I agree not worth it at the moment) you need to DIY which means you need to have a basic level of understanding about investments and make some decisions I'm afraid.

You've already made one - not to continue paying in to old pension, you now need to make more. Not at the level of whether Apple is a better investment than Amazon, the experts managing your funds will decide that.

More at the level do I want all CASH (No would be my suggested answer), 100% equities (No would be my suggested answer), 100% UK or 100% US (again No would be my suggested answer).

What is likely to suit is one of the large, multi-asset type options e.g. Vanguard LifeStrategy, HSBC Global Strategy, Blackrock Consensus, L&G Multi Index etc.

They are all slightly different in approach but they all aim to give you a "one stop shop" of investments across asset classes and across geographies. Which one is down to personal choice, and within each range you need to choose the level of risk / volatility you are comfortable with.

That choice should follow on from a realistic appraisal of your overall FAMILY financial situation.

What's your spouses pension situation like? Mortgage? Income / Employment situation for next few years? Emergency Fun / Other Savings? Likely future costs e.g. children etc.

Pensions are just one component of your Financial Plan, an important one but not the only one.

Once we know a bit more about overall situation you will get more targeted replies I'm sure.

xylophone

Are you self employed or employed by your own limited company?

Some reading:-

DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning, by John Edwards.

https://theescapeartist.me/2018/04/26/do-you-even-know-whats-going-on-in-your-pension/

https://theescapeartist.me/2015/09/07/honey-i-fired-the-financial-adviser/



https://theescapeartist.me/2015/07/28/the-simplicity-portfolio/

https://www.pensionbee.com/guides/download-self-employed-guide


https://www.pensionbee.com/pensions-explained/pension-contributions/contributing-to-your-pension-from-your-limited-company?ast=DfN6lb

OldMusicGuy

What xylophone says. Please learn a bit more about how pensions work, they are rather important for your future. You have wrongly understood that "experts" manage them. The experts set up pension schemes and various investment options which they manage but you decide which of the thousands of investment options your pension money goes into (unless of course you pay an IFA to do it for you). The performance of your pension depends on those choices.

FWIW I know where you're coming from because I had the same attitude/understanding in 2008. I'm now confident in making investment choices for a large personal pension. It does require a bit of effort on your part, but reading things like the Edwards book will really help you understand how to approach this from a position of greater knowledge. You don't have to become an expert in complex investment choices, it can be pretty straightforward.

BathMoney

Thanks, everyone, sorry for not responding sooner, going through cowboy builder hell here.

My perception of my old plan was it wasn't great but I may be just plain wrong, I obviously need to get educated.

@dunstonh Thanks for your help

@AlanP Thanks for the advice I will check out that link.

@xylophone and @OldMusicGuy Thanks I will check out those links and buy that book.

BathMoney

I have now read quite a lot about investing. I think the following plan makes sense, I wonder if someone can let me know if I am on the wrong track, am worried I have missed something fundamental.

My current pension (value CIRCA £21,000) hasn’t been added too for some time, it has been taken over by a third party and the value dropped by CIRCA £300 this year. The provider has written to show me the funds I can now invest in. The funds available (9 in total) seem rather limited to me and also come with a 0.65% Product AMC and an Investment AMC of 0.04% to 0.10%. There are no termination penalties and no benefits or guarantees lost if I transfer.

Looking at our future plans and taking into account our State Pensions my wife and I would be quite comfortable in retirement. However, it would be good to get an additional £2,000 per annum income. I have 20 years to go before planned retirement.

It seems to me that taking a passive approach I could opt for AJ BELL and invest the current pension in something like the Vanguard LifeStrategy 60% Equity Fund A Acc. From what I can tell this would still leave me short of the £40,000 value I need in 20 years time. So to prevent a shortfall I could invest £100 to £200 PCM.

Other points....

Should I consider other funds in light of Brexit deal or no deal, perhaps something that's less UK focused? Say the HSBC Global Strategy Dynamic Portfolio Acc. or the HSBC Global Strategy Balanced Portfolio Acc?

I'm going to earn approx. £1,800 of taxable income in 2018/19 so £360 in income tax. I have read about the drip-feeding concept but is it worth considering investing the £1,800 before the tax year ends? If so is there anything I should bear in mind or be looking at?