Self employed - Stakeholder vs SIPP

Not_a_clue_2

Hi All,


Total newb here with finances and pensions in general. I'll try to keep this short.


I'm self employed, want to start a personal pension. Done some reading and found Stake Holder pensions or SIPPs.


Loads of info on SIPPS, but the big thing i keep reading is "If you dont know what you're doing do not get a SIPP as you have to make your own investment choices"


Ok, I think. I have no clue, best not pick the SIPP. Let's go for a stakeholder pension. Trouble is, I literally cant find much info on these like I can with the SIPP. Cant even find a comparison site of companies offering them?


Does anyone have any good info or point me in the right direction on where to get a good stakeholder pension?



A bit about me, late 20's no decent pension so far. Will be paying in a lump sum of £10,000 and then £2,500 a month after that.


Thanks for reading.

Dazed_and_confused

Do you have sufficient profit to be eligible to make those size payments and qualify for tax relief?

Not_a_clue_2

Dazed_and_confused wrote: »

Do you have sufficient profit to be eligible to make those size payments and qualify for tax relief?

Sorry I dont understand what you mean? If you're asking if I earn enough to pay in 2.5k then yes I do, easily. I dont understand the tax relief bit?

Mojisola

Not_a_clue wrote: »

I'm self employed, want to start a personal pension. Done some reading and found Stake Holder pensions or SIPPs.

Ok, I think. I have no clue, best not pick the SIPP. Let's go for a stakeholder pension. Trouble is, I literally cant find much info on these like I can with the SIPP. Cant even find a comparison site of companies offering them?

We recently make enquiries at Aviva - they wouldn't even tell us whether they did a Stakeholder Pension (because that would constitute 'advice'!) - told us we had to go through an IFA.

Dazed_and_confused

If you pay in £2,500/month for a whole tax year you will end up with a gross annual contribution, including the 25% uplift, of £37,500.

What you "earn", whatever that actually means, doesn't come into it.

Is your self employed profit going to be £37,500 in 2019:20?

Not_a_clue_2

Dazed_and_confused wrote: »

If you pay in £2,500/month for a whole tax year you will end up with a gross annual contribution, including the 25% uplift, of £37,500.

What you "earn", whatever that actually means, doesn't come into it.

Is your self employed profit going to be £37,500 in 2019:20?

Yes profit will be a lot more than £37,500.


Edit: And sorry if I'm using incorrect terms like "earn". As stated in the OP I'm not clued up on any of this stuff.

BLB53

Loads of info on SIPPS, but the big thing i keep reading is "If you dont know what you're doing do not get a SIPP as you have to make your own investment choices"

Agree pensions can be confusing but a SIPP is just a wrapper and the choice of funds to put into your pension can be a simple as a multi asset global index fund such as Vanguard Lifestrategy.

Before you dismiss SIPPs completely, have a read of the 'DIY Pensions' book by Edwards.

If that makes no sense, then yes look into stakeholder or Robo Adviser route with the likes of Nutmeg or Moneyfarm for example.

gdrforest

If you are self-employed through your own Ltd company then you can make company contributions. You don't get the tax uplift but you avoid employer NI, employee NI, income tax and corporation tax on the contributions. SIPP providers have ready-made funds at different levels of risk and complexity that you can choose from without having to make specific share-based investment choices.

dunstonh

Stakeholder is the basic option. Providers have to carry out due diligence on funds. You still have to pick the investment fund(s) but its harder to make a mistake apart from taking too little or too high risk.

Personal pensions are the middle ground. Again, due diligence has to be carried out by the provider. Personal pensions can carry hundreds of even a couple of thousand funds.

SIPPS are the more advanced option. You can pick from 30,000 or so options plus a large range of unregulated options. SIPP providers do not carry out due diligence. It is your job to do it or the IFA you employ.

SIPP providers have ready-made funds at different levels of risk and complexity that you can choose from without having to make specific share-based investment choices.

Usually best avoiding those are they are usually very expensive. Indeed, more expensive than going with an IFA and letting them do the work. DIY is about doing things cheaper. If you DIY and pay more than using an IFA then you defeat the purpose.