Help on pension planning

InhaleMood

I wonder if anyone can point me in the right direction?
I'm 37, self employed (approx £14k pa), private renter, no debts. I'm not thinking about saving to buy a house in the short/medium term.
I have approx £40k in savings (a mixture of Marcus easy access savings / Wealthify / Funding Circle).
I have 6 small pension pots equalling approx £26k, one of which is a NEST pension.
My state pension estimate is £95/week at present, 15 years of contributions, 6 years where I did not contribute enough and 2 years in which I could top my incomplete contributions (17/18 / 9/10). They don't have details for 18/19 as I was self employed.
I have had mental health problems where I haven't been able to work so I am wary of tying up all of my savings. However, I am aware that a pension is probably what I need to start thinking about.
Questions

1. Should I top up my incomplete state pension contributions?
2. Is it worth combining all of my pension pots in one place?
3. Would it be worth putting the maximum amount into a pension for this year (£14k)?
4. What type of pension should I start paying into? I don't think I trust my knowledge enough for a SIPP! NEST or Wealthify? Or a LISA?

I hope that is clear, relevant information, and that someone might be able to help!

Marcon

tanyasharma said:

I wonder if anyone can point me in the right direction?
I'm 37, self employed (approx £14k pa), private renter, no debts. I'm not thinking about saving to buy a house in the short/medium term.
I have approx £40k in savings (a mixture of Marcus easy access savings / Wealthify / Funding Circle).
I have 6 small pension pots equalling approx £26k, one of which is a NEST pension.
My state pension estimate is £95/week at present, 15 years of contributions, 6 years where I did not contribute enough and 2 years in which I could top my incomplete contributions (17/18 / 9/10). They don't have details for 18/19 as I was self employed.
I have had mental health problems where I haven't been able to work so I am wary of tying up all of my savings. However, I am aware that a pension is probably what I need to start thinking about.
Questions

1. Should I top up my incomplete state pension contributions?
2. Is it worth combining all of my pension pots in one place?
3. Would it be worth putting the maximum amount into a pension for this year (£14k)?
4. What type of pension should I start paying into? I don't think I trust my knowledge enough for a SIPP! NEST or Wealthify? Or a LISA?

I hope that is clear, relevant information, and that someone might be able to help!

1. If you expect to be paying NI for the next 30-odd years (or least a high proportion of those years), it isn't likely to increase your final state pension under the current rules.
2. Possibly but not always - and no urgency to do so. Helpful reading: https://www.thisismoney.co.uk/money/pensions/article-3550085/STEVE-WEBB-merge-small-pension-pots.html
3. 'Worth' in what sense? If you have a period of poor health where you can't work, having cash tied up in very long term savings may add to your problems. Certainly worth paying in something, given that you have a good cash cushion of savings, but probably not the maximum (which would be 80% of £14K, with the provider reclaiming basic rate tax relief on your behalf and adding it to your pension pot)
4. Helpful reading: https://www.citizensadvice.org.uk/debt-and-money/pensions/starting-a-pension/choosing-a-personal-pension/

Thrugelmir

tanyasharma said:

 I'm not thinking about saving to buy a house in the short/medium term.

Whatever the term. Pensions and investing should be considered long term. Utilising your LISA allowance at no risk to your capital should form part of your thinking. 

InhaleMood

3. 'Worth' in what sense? If you have a period of poor health where you can't work, having cash tied up in very long term savings may add to your problems. Certainly worth paying in something, given that you have a good cash cushion of savings, but probably not the maximum (which would be 80% of £14K, with the provider reclaiming basic rate tax relief on your behalf and adding it to your pension pot)

Thank you for your comments.
"Worth" as in, are the benefits of that money being in a pension much higher than it being in a savings account? When I put it like that, I guess yes.

InhaleMood

Thrugelmir said:

tanyasharma said:

 I'm not thinking about saving to buy a house in the short/medium term.

Whatever the term. Pensions and investing should be considered long term. Utilising your LISA allowance at no risk to your capital should form part of your thinking. 

Definitely. I guess I am thinking about whether the limited savings should go to a pension or a LISA for retirement. Thanks

Albermarle

Worth" as in, are the benefits of that money being in a pension much higher than it being in a savings account? When I put it like that, I guess yes.
A savings account gives a low return but is safe . This is most suitable for money you might need in the the short to medium term ( < 5 years) . You should always have an emergency fund to cover periods with no income or unexpected expenditure .
The alternative is investing for the long term in stocks and shares. Some risk involved but this diminishes the longer you hold the investment . On the plus side your money should grow faster than in a savings account ( in the long term = > 10 years )
You can invest via a pension . In this case you also see a tax benefit but you can not touch the money until your late Fifties.
You can invest via Stocks and Shares ISA . Here there is no tax benefit but you can access the money if necessary, although it is really a long term investment, so best left alone if possible .
A LISA is a bit unusual as you can have  cash savings LISA or a Stocks and Shares LISA. IN both cases you get a government top up but it comes with some rules and restrictions. 

InhaleMood

Thanks for that info. 
I've just had a free intro call with an IFA. I feel like my requirements are fairly simple, would it be worth using an IFA at these low levels of money? 

Marcon

tanyasharma said:

Thanks for that info. 
I've just had a free intro call with an IFA. I feel like my requirements are fairly simple, would it be worth using an IFA at these low levels of money? 

Before going any further, ask the IFA what value they can add and to which areas of your portfolio to ensure that using an adviser is cost effective - although hopefully they will have given you a broad indication (but certainly no sort of advice) as part of their 'intro'.

InhaleMood

Marcon said:
Before going any further, ask the IFA what value they can add and to which areas of your portfolio to ensure that using an adviser is cost effective - although hopefully they will have given you a broad indication (but certainly no sort of advice) as part of their 'intro'.

His response was :

That’s a very difficult question to answer as what are the metrics you’re looking to quantify that against? 

We offer value in the expertise and knowledge of where to put your investments, the planning and forecasting we provide aswell as the continual management to hopefully ensure that what we set out to do is on track, or if not how can we rectify that. 

Sorry it’s not a definitive answers as the question is a difficult one to answer. If you look at the value of advice, there are many articles and research which show they believe advised clients are on average 1.5-2.5% per year better off than had they not received advice.

What do you reckon? 

dunstonh

Sorry it’s not a definitive answers as the question is a difficult one to answer. If you look at the value of advice, there are many articles and research which show they believe advised clients are on average 1.5-2.5% per year better off than had they not received advice.

You have to remember that the average consumer is pretty low knowledge when it comes to investing.   Take the largest DIY platform in the UK.   Two of their own brand funds are in the top ten purchases.  If you are going DIY and that is the sort of thing you are looking at then an IFA can add value.     The review that the FCA carried out that has led to the investment pathways was not because of advisers.   It was because of DIY investors and poor decision making.

This has a lot of knowledgeable DIY investors.  They are not representative of the public in general.  If you are knowledgeable and you DIY then the IFA cannot add value unless you just dont want the personal involvement and get the IFA to do it for you.  Or you don't really have the knowledge you think you have (e.g. a Daily Mail reader who doesn't get past the headline!).     It is like any other job in life.  You either DIY or get someone to do it for you.   DIY well and you can save money. DIY badly and it can cost you.  

If we have a transactional client, we use different investment options to ongoing servicing clients.  That is quite common due to the FCA position that recommendations should match the ability and understanding of the individual (based on an EU directive).   So, you won't put a portfolio of single sector funds in place on a transactional client but more likely to use a simplified option.  So, there is a consequence to choosing transactional over servicing.   An IFA isn't that bothered whether you want one way or the other. Wealth Managers and FAs really want servicing clients.  Indeed, may IFAs wont even offer servicing unless you are into 6 digits

InhaleMood

Thanks for the advice.
Could anyone point me in right direction for decent personal pension plans?
Is this a decent list to start with?

https://www.wealthify.com/
https://www.nutmeg.com/
https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/personal-pension-account
https://www.fidelity.co.uk/services/sipp/
https://www.standardlife.co.uk/pensions

I'm thinking the way to compare is their annual charges + the last 10(?) years performance + fund manager performance.
Thanks all!