New pension advice wanted

Mercuryrob

Hi to all members, new member here .. I am asking for advice on investing a lump sum to start a new pension, I am 57 and never had a pension. How do I start a new pension, who where what ? Advice greatly appreciated. Rob

MEM62

Talking to an IFA would be prudent. If you have access to a workplace scheme, joining that would be an brainer.

xylophone

Hi to all members, new member here .. I am asking for advice on investing a lump sum to start a new pension, I am 57 and never had a pension. How do I start a new pension, who where what ? Advice greatly appreciated. Rob

Are you employed? Is there a pension scheme?

Do you have "relevant earnings"?
https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

AnotherJoe

You need to give more details about your personal circumstances Rob.

Mercuryrob

My apologies, So I am currently on ESA after an illness. I have been self employed for 30 years up until my illness. I have never had a pension.

Many thanks

tacpot12

You can make a lump sum payment into a pension now, but you will not get very much tax relief on it if you do. As you didn't have a pension when you were self-employed, you can't use the carry forward rules to get any more tax relief than you are allowed if you have have no relevant UK earnings. So you are limited to £720 tax relief this tax year.

This means that a pension many not be the best investment vehicle for you. A Stocks & Shares ISA could be a better way of saving as there will not be any tax to pay on any money you take out of the ISA in future.

I use AJ Bell for my pension, and have had a Stocks & Shares ISA with them in the past. I've been pleased with the service and the charges are quite cheap compared to some other providers.

xylophone

Have you obtained a state pension forecast?

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

If you are looking to have tax relief on your contribution, you are limited to a net payment of £2880 to the scheme - the provider will claim relief of £720.

A simple stakeholder might suit you.

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

You might wish to consider a stocks and shares ISA - you will need to do some reading - some to start

https://monevator.com/using-vanguard-lifestrategy-funds-life/

https://www.vanguardinvestor.co.uk/investing-explained/stocks-shares-isa

AnotherJoe

tacpot12 wrote: »

You can make a lump sum payment into a pension now, but you will not get very much tax relief on it if you do. As you didn't have a pension when you were self-employed, you can't use the carry forward rules to get any more tax relief than you are allowed if you have have no relevant UK earnings. So you are limited to £720 tax relief this tax year.

This means that a pension many not be the best investment vehicle for you. A Stocks & Shares ISA could be a better way of saving as there will not be any tax to pay on any money you take out of the ISA in future.

I use AJ Bell for my pension, and have had a Stocks & Shares ISA with them in the past. I've been pleased with the service and the charges are quite cheap compared to some other providers.

Why then wouldnt a pension be a good idea? If income is low thats up to £720 free money every year because OP wouldnt pay tax on that either especially if they did it between age 55 and SP age.

Mercuryrob

Thank you for all your help, so after reading the links fellow forum members quoted, I have been in to my bank ( Halifax ) for a pension enquiry, Halifax use Scottish Widows. So a call to them gives me two options, a Stakeholder pension with up to 35 to choose from at 1% per annum and a retirement account but only available through a FA or a Stakeholder first and then transfer over free of charge to a retirement account ( just in case I needed to take up to 25% out ) The retirement account through a FA costs are £500 plus. If you did take money out of your pension he tells me that under the Money purchase annual allowance I would be penalised in the form of restricted further pension contributions. So is this normal or are their better deals out there ? Hope this all makes sense. Rob

xylophone

It is permitted to take a 25% Pension Commencement Lump Sum without triggering the "Money Purchase Annual Allowance" (which restricts the annual contribution to a Defined Contribution Pension to £4000).