Where to start for pension.

Cheillie2020

Hi,
I am after some advice about the best way to set up a pension for myself. I have 0 experience in pensions or investments so have no idea what to do or where to start. 
Is it something that I can easily do myself or do I need a IFA, and if so what fees should I be look at, whats reasonable and whats not. 
To give you an idea of my circumstances:
I am 30 years old. Always been self employed since 17 years old until 2-3 years ago made the transition to be LTD.
I pay myself a small salary topped up by dividends. The company is looking at a £15-17k-ish corp tax bill this year which had got me thinking more about pensions as I believe it can be a business expense. 
I have no pensions in place, no investments, no ISAs  etc. However, I do have around personal £100k savings dotted around 3 different easy access accounts.....making piddly interest obviously. 
I realise this might a topic for the "investments" section too, but I thought I'd try and give as much details as possible, and ultimately I want to offset some of this business CT to benefit me. 
I have an accountant who has simply put my in touch with a large investments/pensions company, but I feel uneasy going into something without knowing what kind of fees, or setup I should expect. 
Do I need to know the ins and outs of all trading and investments linked to a pension, or is that something I should just leave to whoever manages it? 
I would imagine putting £500 a month into a pension is easily doable from the company. And if I get one setup before the end of my company year I could possibly do a large amount in one go, maybe? 
Sorry, lots of questions, any help would be greatly appreciated. 

Albermarle

I will answer a couple of the questions
Is it something that I can easily do myself or do I need a IFA, and if so what fees should I be look at, whats reasonable and whats not. 
You can open a pension on line yourself in a matter of minutes for free. Then you have to pick the investments within the pension. Some pensions offer thousands of choices but for newbies there are some much simpler ones that only offer a few and it is well explained what each of them are . You could look at this one to begin with .https://www.nutmeg.com/new-to-investing
An IFA will not be interested in the sums you mention .
Some more general background info on investing is here https://www.moneysavingexpert.com/investments/

Cheillie2020

Albermarle said:

An IFA will not be interested in the sums you mention .

Thanks Albermarle. 
Can I ask why an IFA wouldn't be interested? You mean there isn't a big enough pot for them to make any money? 
How does anyone in the same position as me get a pension then? Just do it themselves? 

dunstonh

Can I ask why an IFA wouldn't be interested? You mean there isn't a big enough pot for them to make any money? 

Some IFAs wont see people with less than £250k.  Some will go lower to £100k.  The ones with the business model that focuses on assets under management wont be interested.

However, there will always be some that would see you.  If its a quiet period of the year for example (which it isn't in the month of tax year end). Or a new adviser without sufficient clients yet.  The ones with the business model that includes offering one-off transactional advice.

There will be a good number of IFAs out there that would be interested in offering services on £500pm from a limited company. its a simple transactional advice case for them.   

TVAS

You should be making employer contributions as this will be treated as a business expense.

Cheillie2020

TVAS said:

You should be making employer contributions as this will be treated as a business expense.

Is this different to what I've read about the company making a monthly DD expense to 'the pension'? 
My understanding is that once said pension is setup, the company would simply do a monthly DD into the pension pot. Which is treated as a business expense. 
Myself, personally wouldn't contribute anything, its the company that contributes before tax, right? 

WindInHerHair

We also run a Ltd company and pay our pension contributions via our company to benefit from Corporation Tax relief. It's great to see such a big reduction in your tax bill, knowing that you will benefit from this move later on in life. We use Aviva because it is user friendly and transparent with regard to charges. All pension providers charge a 'platform fee' which is typically 0.35 per cent. On top of that, depending on which pension fund you choose to go with, you are charged a 'management fee' anything from 0.25 per cent to much higher. You may want to do some research on the fees charged by different pension providers of which there are many (Vanguard, Fidelity, Hargreaves Lansdown, Charles Stanley...) With Aviva, you can either set up monthly 'Employer Contributions', or wait until the end of your financial year when you know what your Corp Tax liability will be for the following year/ how much cash reserve you may need to hold in your business and then make a 'one off Employer Contribution' lump sum. Once you have set up your pension account, you can either choose a 'Ready made fund'  or 'Self Select' depending on your experience. For now you may want to choose a ready made fund while you acquire more knowledge over time about the zillions of funds there are to choose from. You may want to spend a few years reading books/ Internet forums gaining knowledge about how to diverse your portfolio across different sectors/ geographical locations etc. You may also want to research funds that are Environmentally and Socially responsible (ESG funds) if this matters to you. 

One thing to mention. You are absolutely right to start thinking about a pension at your age. Furthermore, your £100K savings are wasting away where they are.  Depending on your annual income, you could drip feed your savings, up to 100% of your annual earnings (max £40K per year) each year to attract Government Tax relief (20% basis tax rate payer, 40% higher tax rate payer). For example, if you receive an annual income (combined salary/dividends) of £20K per year, you could make a Personal Contribution of the same amount (from your savings pots) and earn £5K tax relief per year. If you did this using the rest of your savings pot over a period of 5 years, you would receive a total of £25K in government tax relief. Better than the easy access interest rates... Good luck!

Cheillie2020

Thanks for that. That makes sense!
I guess I am worried about a DIY job as I have no knowledge of what I'm doing. But I guess a lot of these platforms don't need much input from the customer if they are a novice? 
I've looked at Aviva, and I've obviously heard of them, but I've also looked at Penfold and PensionBee, they seem to have a nice platform and put it in layman's terms, but should I be worried about going with a company I've not heard of? Has anyone had any experience with either of those? 

MoneyGeoff

Whilst your accountant isn't a pensions expert, surely he must understand the financial side of it? Does he not advise you on how to run your company most tax efficiently? Employer pension contributions are a big part of that.

Cheillie2020

MoneyGeoff said:

Whilst your accountant isn't a pensions expert, surely he must understand the financial side of it? Does he not advise you on how to run your company most tax efficiently? Employer pension contributions are a big part of that.

He's said that I need to start thinking about setting up a pension as the company can claim it as an expense, and he's put me in touch with a large company that have a 'pensions' team. But I feel like I'd be going into it blind and wouldn't really know what charges are acceptable and what 'service or type of pension' I need.
My accountant is good and have no issues but I guess he doesn't really get involved with setting up a pension. 

LHW99

Most of the SIPP platforms could cope with you setting up a SIPP and making company contributions. You may have to fill in a form, to confirm it was a company, not a personal contribution, so that tax is not reclaimed, but if your company made a single payment near the year end its not much bother.

Once you have accumulated a bigger pot, then you could look at getting more advice, or you could learn a bit yourself and carry on. SIPPs don't have to be complicated - funds from Vanguard (VLS 40, 60 etc or lifestrategy), L&G (multiasset) and others are mentioned on here frequently. None of them would necessarily be the most spectacular, but would do the job initially, and be better than no pension investment at all.