2nd Pension alongside DB pension

noClue

Hi guys,
I want to know what the best types of 2nd pension I should choose running alongside my main DB teachers' pension?
I am around 35, basic rate atm.
The reason I want a second pension is for tax efficient purpose (probably like everyone else here).
1) Will make sure to stay in the basic rate band, when the date comes that I become a higher payer...
2) To contribute extra pension (<=max out) to further be tax efficient...
3) Given some flexibility for me to have the option to retire or go part-time earlier (think my projected NRA is 67 or 68), so I have something to cover me spending up before NRA and state pension. Think if I have to draw DB pension earlier it will cost me a lot in the pot re reduced size etc!
Thanks.

Albermarle

Your only choice is to set up a DC ( Direct contribution ) pension . You get tax relief on your contributions at the basic rate. So if you add £80 then £20 is added by the provider . If/when you become a HRT then you have to claim the extra tax relief from HMRC.. At the moment you can withdraw from a DC pension once you are 55. 25% will be tax free.
There are variations of DC pensions : personal pension, stakeholder, SIPP etc . The same rules above apply to all of them though. The difference is largely down to the choice of investments and charging structures.
The investments your money is in within the pension , is more important than the actual pension itself. 
Have a look at this government sponsored website.
https://www.pensionsadvisoryservice.org.uk/

xylophone

Had you considered AVC taken direct from pre tax salary which obviates the need to claim back through HMRC?
https://www.teacherspensions.co.uk/members/faqs/working-life/additional-voluntary-contributions.aspx
Payment of your teachers’ AVC benefits is not linked to payment of your pension from Teachers' Pensions. You could access your teachers’ AVC at any time from age 55.

noClue

Hey thanks @Albermarle
Just like my normal investment, I would probably want something with low cost, and the investments would be passive and multi-asset, like how vanguard retirement fund works (not necessarily picking vanguard). I probably wouldn't want further diy atm. My contribution would be quite low and/or inconsistent in the next a couple of years before I further figure out my bigger plan(s), but will increase (or even max out-ish) with some point or so.
Any suggest re which type I should choose. I had a quick look, seems stakeholder is a suitable one? I don't really need SIPP's choice of investment options I guess?

So 1) any suggestion?
2)What is "personal pension", the one before "stakeholders, SIPP etc"?
3) Will it be easy to transfer stakeholders into a new SIPP in the future or if I have need later just open another pension?
Thanks!

noClue

xylophone said:

Had you considered AVC taken direct from pre tax salary which obviates the need to claim back through HMRC?
https://www.teacherspensions.co.uk/members/faqs/working-life/additional-voluntary-contributions.aspx
Payment of your teachers’ AVC benefits is not linked to payment of your pension from Teachers' Pensions. You could access your teachers’ AVC at any time from age 55.

hmmmm nice! So this works more or less like a 2nd independent pension right? I will look into it and might come back with questions

xylophone

Might be worth a read.
https://www.pru.co.uk/pdf/TAVK0789.pdf

xylophone

Vanguard offer their own pension.
https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/pension-calculator?cmpgn=PS0220UKBABSP0001EN&gclid=EAIaIQobChMIjJGR4uaL6wIVWu3tCh3sxQWGEAAYASAAEgI1J_D_BwE&gclsrc=aw.ds

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/contract-based-schemes/stakeholder-pension-schemes

https://www.standardlife.co.uk/c1/accounts-and-services/pensions/stakeholder-pension-features.page

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

noClue

OK, I had a look at prudential AVC. It seems to me that prudential made a deal with TPS so they got themselves introduced to us effortlessly. I don't see any perk to have this AVC? There's literally no benefit and it's just like independent from TPS, apart from the name? Did I miss anything? Plus, their fund admin fee is not the lowest, and I can not see their past performance on their website?

If my above understanding is correctly, I might as well just find my own 2nd pension. Vanguard could be a choice but I already have some of their funds.....

StandardLife has very high charge (1%) I think? Although they have that discount I don't think it's as significant as their charge...?

For pension, do you pay both fund admin fee and platform fee just like any other investment you have right?

bigadaj

Looks like you are doing some good research. AVC is an easy option but like any investments the real variabilities are charges, choice of investment funds and access. You say charges are high, there are often restricted fund options and access in some such schemes are restricted to normal retirement age, removing the flexibility to retire early. Personal pensions used to be the default option but are now relatively expensive,  and sipps are  more common. Personal pensions are mono charged, with sipps you play a platform charge and separate fund fees, so similar to isas and gias.

Albermarle

2)What is "personal pension", the one before "stakeholders, SIPP etc"?
For pension, do you pay both fund admin fee and platform fee just like any other investment you have right?

In simple terms you could say a personal pension was more complicated than a stakeholder but less than a SIPP . However all these terms kind of merge into each other . As already said the difference is usually complexity/choice of investments + charging structure .

Your AVC would seem an easy option . Vanguard also have a relatively simple offering as do Pension Bee and Nutmeg.

Some pensions have just one charge ( Standard Life and Pension Bee to name two ) and others have a separate platform and fund fees .

Making sure you have the right type of investment within the pension for your circumstances , is more important than the actual choice of pension provider .

noClue

Thanks both. I think I will go down the SIPP route. It's better for me anyway as quite similar to normal investment. If I really don't bother DIY and balancing, I can always pick a suitable multi-asset fund...