Personal Pension... where to start?

hotdog

Hi,

I'm 45 and need to set up a pension as I've not paid into one for over 10 years. I have an old company pension (can't invest more into it) with Fidelity. I have no investing skills, so a SIPP doesn't sound like the right thing. I'm quite risk averse, but understand that a little risk might pay off. I think a Personal Pension is what I need, but I don't know where to start in trying to list providers and compare them.. I've got a £40k lump sum to put in initially with monthly payments to follow, although I'd like to maintain flexibility. I don't have a specific target retirement age but I want to make sure my wife has an income should I no longer be around.

Whenever I search around, all the articles seem to talk about SIPPs. I assume that with SIPPs you have to choose which shares/funds(?) you want to invest in and manage your own buy and sell to "climb the financial ladder". I *think* I just want to put money in and have someone else manage the buying and selling to grow the money in the pension.

Sorry for rambling. I guess my main question is where should I go to get a good comparison of Personal Pensions so I compare the features, setup, ongoing and transfer charges, and performance so I can make an informed decision?

Many thanks for your time reading this.

SonOf

I've got a £40k lump sum to put in initially with monthly payments to follow,

Do you have the earnings to support a contribution of that level. (there is a £40k gross annually allowance unless you earn above £40k and then there is an ability to use previous years allowances).

are you employed? (if so, what about the workplace scheme?)

Whenever I search around, all the articles seem to talk about SIPPs

SIPPs dominate the DIY market. Whereas the advice market is split between SIPPs, personal pensions and a small number of stakeholder pensions.

Basically, if you choose to DIY rather than use an IFA, then you are likely to be looking at SIPPs. Of you choose to use an IFA, then the IFA does the work.

xylophone

You could try an IFA.

https://adviserbook.co.uk/ Tick "confirmed independent" and "pensions and retirement".

Or https://www.cavendishonline.co.uk/personal-pensions might be worth a look.

Some reading

https://www.moneywise.co.uk/pensions/manage-pension/how-choose-your-pension-funds

https://moneytothemasses.com/saving-for-your-future/pensions/the-best-cheapest-sipps-low-cost-diy-pensions

https://monevator.com/low-cost-index-trackers/

https://www.hl.co.uk/pensions/contributions

https://www.amazon.co.uk/DIY-Pensions-Simple-Retirement-Planning-ebook/dp/B00B7QN8XM

hotdog

Thanks for the replies. Yes, I earn over £40k and would be looking to use last year's allowance at this point. I'm employed by my own ltd company and there's no auto-enrolment scheme set up and it would be an employer's contribution.

I'll have a read through the links that @xylophone posted.

One of the things that confuses me is the role of a Fund Manager. I believe that, with a SIPP, I'd initially put cash in, then use that to buy stocks/shares/funds. I assume that buying low and selling high is the name of game here. There'd be a platform charge and there'd be charges for buying and selling. But then there's always the mention of Fund Managers and that they charge and it's different per fund. What's that for? What do Fund Managers do? Can I just buy into a Fund and leave it there and it will grow or would I have to buy and sell funds in the same way as shares?

With tracker/index funds, do you have to do the same thing, i.e. enter into a fund when it's low and switch when it's high, or just leave it in the index fund?

Any views on robo services like MoneyFarm?

Dazed_and_confused

Pretty sure you can't use last year's allowance until the current tax years allowance has been used.

hotdog

Ah, okay - that would make sense. Thanks.

Prism

Using a SIPP can be as simple as opening it and then investing in one fund which you then add to each month and then forget about.

SonOf

One of the things that confuses me is the role of a Fund Manager. I believe that, with a SIPP, I'd initially put cash in, then use that to buy stocks/shares/funds. I assume that buying low and selling high is the name of game here.

No. Trying to time the market is a recipe for disaster. You will neither have the knowledge or the crystal ball to know when the times to buy/sell are.

But then there's always the mention of Fund Managers and that they charge and it's different per fund.

Fund managers are in control of the investment fund(s) that you buy.

Can I just buy into a Fund and leave it there

Yes.

With tracker/index funds, do you have to do the same thing, i.e. enter into a fund when it's low and switch when it's high, or just leave it in the index fund?

Index tracker funds are single sector funds. They are designed (as with all single sector funds) to be held in a portfolio of funds. Not in isolation. Multi-asset funds are the all-on-one option;

Any views on robo services like MoneyFarm?

You would find a transactional IFA is cheaper. And you will find DIY (and doing it well) is cheaper).

Moneyfarm has an annual cost of 0.91%. An IFA can get around 0.3x% p.a There would be an initial charge with the IFA for the cost of advice but it wouldnt take long to hit the breakeven point. DIY can get you a similar cost to the IFA but without the IFA charge.

The robo guidence services are really aimed at the bottom end of the market. small contributions etc.

atush

You can use a sipp, because you can choose a diversified Global tracker or a multi asset fund such as Vanguard. You dont need to choose higher risk funds.

But you can open a PP online, and again choose a multiasset fund. Look at Cavendish online

[Deleted User]

Hasn't your accountant been hassling you about taking out a director's pension to lower the corporation tax liability?

OldMusicGuy

This book by John Edwards is really good and will answer many of your questions: DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning.