What's a good pension for sole trader?

confusedfreelancer

I'm 31 and think it's probably time I started a pension. I've been self-employed since leaving uni. Earning roughly £25k a year.

I assumed I would need a SIPP and so I read the MSE article on cheap SIPPs (link not allowed) I have about £10k I can invest right away, and can probably commit to putting about £100 a month into a pension thereafter. From the article, it sounds like AJ Bell or HL might be a good choice for me?

However, the article says: "A SIPP is for someone who understands investing, does the research and is happy to spend some time working at it... if having greater investment choice and flexibility isn't important to you, and your contributions are going to be low, then the answer is probably ‘no’."

I know nothing about investing, so is a SIPP the wrong product? In which case, what's a simpler option for someone without an employer? A stakeholder pension?

I already have a LISA but am keeping it in cash with the intention of using it for a house deposit.

232607

A better (more simple) option would be a personal pension (PP).

Dox

SIPPs have become flavour of the month because you can access the benefits 'flexibly'.

Given how far from retirement you are at present, that probably doesn't need to concern you. A stakeholder pension would do nicely until you decide you want more investment choice, more flexibility at retirement or whatever. Low charges and no exit penalty, so you can transfer at a later date.

want_to_save

232607 wrote: »

A better (more simple) option would be a personal pension (PP).

Also personal pensions on platforms for example Aviva's platform have the flexibility at retirement that a SIPP does without the extra charges. good luck on your road to retirement planning

Prism

A SIPP doesn't have to be complicated. Most including HL, Youinvest and Aviva (which is a SIPP nowadays) have very simple investment options - single fund typically. If you want to get more complex you can but it doesn't have to be. Nobody seems to offer stake holder or personal pensions much anymore.

confusedfreelancer

Gov.UK says that SIPPs and stakeholder pensions are types of personal pensions? Is there a separate product called a personal pension that is different from a SIPP or stakeholder? Where would I get one?

dunstonh

Gov.UK says that SIPPs and stakeholder pensions are types of personal pensions? Is there a separate product called a personal pension that is different from a SIPP or stakeholder? Where would I get one?

Yes, there are three types of retail pension. Stakeholder, personal pension and SIPP. Personal pensions are generally the middle ground nowadays between stakeholder and SIPP.

Most, if not all personal pensions (PPP), are put in place via IFAs (or FAs. ALthough you don't want to use an FA). The DIY market has not utilised PPPs as they are more expensive for companies to operate due to the greater regulatory requirements placed on them compared to SIPPs.

So, if you plan to DIY, then you would use a SIPP in most cases. If you plan to use an IFA, they will consider using a stakeholder, PPP or SIPP depending on your situation as they see it.

There is a fourth variation nowadays too. Master Trust schemes. These tend to be used as auto-enrolment schemes by employers and some of the robo-pension schemes. They are a variation similar to stakeholder but without needing to meet stakeholder rules.

Also personal pensions on platforms for example Aviva's platform have the flexibility at retirement that a SIPP does without the extra charges. good luck on your road to retirement planning

Aviva have dropped their personal pension now for new business. Their platform pension is a SIPP. However, the Aviva platform SIPP does allow access to their internal insured fund range. And at a lower cost. (typically around 0.3x% for platform and fund charge).

Albermarle

Gov.UK says that SIPPs and stakeholder pensions are types of personal pensions? Is there a separate product called a personal pension that is different from a SIPP or stakeholder? Where would I get one?

Just to be clear, in legal and tax terms , all these pensions operate under exactly the same pension rules. Personal pensions are/were offered by large insurance/pension companies, like Aviva, Standard Life, Scottish Widows etc . Normally they only offer access to their own range of funds . Typically most money is invested in default/lifestyle/medium risk funds.
Originally SIPPS were for more sophisticated investors . They offered a wide range of funds from many sources and the pension investor could pick from thousands of funds and also individual shares etc
Now low cost Sipps also simple fund choices for non sophisticated investors so the line between Sipps and PP is a bit blurred in some areas. Added to this many of the big insurers have concentrated on offering pensions via IFA's and offering workplace related pensions.
So for an individual wanting to start a new pension today, there is lot more choice of SIPPS and many nowadays offer advice and special/easy funds for the less knowledgeable /interested investor.

confusedfreelancer

Would this be a good option? Someone suggested it on another thread. Sorry had to take out the http etc to be allowed to post.

cavendishonline.co.uk/pensions

Albermarle

It is one of the well known ones so should be OK.
All SIPPS charge a platform fee and then whatever funds are held in the SIPP have a separate fee.
Most Sipps charge a % fee and these are better for lower size of money involved . A few charge a flat fee which works out better for bigger pots . The tipping point is around £100K .
Fund costs will obviously depend on which funds you choose to hold within the SIPP.
Simple index trackers are the cheapest but the most volatile .

BLB53

I know nothing about investing, so is a SIPP the wrong product? In which case, what's a simpler option for someone without an employer? A stakeholder pension?

I guess if you really do not want to know about investing then a SIPP would not be the right product.

However, investing can be very straight forward so if you wish to take the time, I suggest get hold of a copy of Edwards book '"DIY Simple Investing" and explore whether you think it is for you. If so, it should be relatively simple to select a SIPP provider (I use AJ Bell Youinvest), set up your monthly DD and choose a simple multi-asset fund.