Case Study: Me! Self Employed, where to put my pension?

Sparky1uk

I've always had workplace pensions (contribution) until last year, and am now self employed and looking for a pension to pay employer contributions

from my limited company.  

Age 44, full state pension entitlement (or will have by retirement, expecting to retire at 67).   I already have; 

• £50k in Halifax Financial Services Stakeholder, charge 0.51% (mix of Lifestyle High income, Gilt & Fixed Interest Fund (L), International Growth, High Income, International Growth Fund (L), Gilt & Fixed Interest, Pelican, Lifestyle Pelican).  Seems to have done poorly in my opinion (which may be wrong!)

• £50k in Royal London stakeholder, 0.31% charge, Balanced Lifestyle Strategy (Drawdown). Seems to have done very well (same caveat as above!).  

I have £40k after first year of business to pay into something.
 

My attitude to risk is moderate and with over 20 years until retirement I accept some risk from the markets. 

I've been to an IFA who wants to sign me up to SJP, 4.5% one off then 2% annual management charge. So here I am trying to research whether the seemingly high charges will be offset be stellar growth from a superstar investment team.  Do I sound sceptical?

Ideally I'd like something I don't have to watch very often.  I don't need a pretty app, I do need basic functionality to pay in an employer contribution once a year. 

What would you do in my situation?  SIPP with HL or Vanguard and a managed fund?   And would you consolidate the existing funds too?   How should i research "trusted" well managed funds?  And is it a pipe dream to expect to pay in and let a fund get managed without switching around for the rest of my working life?  

Thanks in advance for any help, i suddenly feel pretty green with so many options available.  

eskbanker

Sparky1uk said:

I've been to an IFA who wants to sign me up to SJP, 4.5% one off then 2% annual management charge. So here I am trying to research whether the seemingly high charges will be offset be stellar growth from a superstar investment team.  Do I sound sceptical?

You certainly should be sceptical if someone describing him/herself as an IFA wants to sign you up to SJP!

Albermarle

I've always had workplace pensions (contribution) until last year, and am now self employed and looking for a pension to pay employer contributions

from my limited company.  
You are either self employed or a director of your own small business. ? Which one is it as it has a big effect on pension contributions ?

For your existing pensions , you could maybe  just invest in one of them rather than opening a new one . Although most investments have done well in the past few years so not sure why the Halifax one has done poorly . Also RL may not accept new contributions unless via an advisor ( that is the policy of some providers) 

As above best to avoid anything to do with SJP . They are perfectly legitimate but expensive with long tie in clauses.
How should i research "trusted" well managed funds?  And is it a pipe dream to expect to pay in and let a fund get managed without switching around for the rest of my working life?  
If you stay with mainstream providers you can 'trust' all the investments , although all investments can go down as well as up .

xylophone

You could do it yourself - some preliminary reading

https://www.wob.com/en-gb/books/john-edwards/diy-pensions-a-simple-guide-to-pensions-sipps-retirement-planning/9781520782683?gclid=EAIaIQobChMI6P2pvOys9QIVloFQBh3kLQdvEAQYAiABEgJWtfD_BwE

https://monevator.com/best-global-tracker-funds/

https://monevator.com/compare-uk-cheapest-online-brokers/

Or find an Independent Financial Adviser. Tick "confirmed independent" and other specialisms required when the menu comes up.

https://adviserbook.co.uk/

Sparky1uk

Sorry, I didn't explain that properly, I'm director of my own small business so will pay employer contributions from the company direct into the pension.    

Thanks for confirming what I've read in various places about SJP.  Enough said about that.    

I'm considering paying into the Royal London and have already contacted them to ensure I'd be able to make the employer contributions.  I don't know if some pensions are limited in any way - It was originally a company provided group stakeholder so not sure if that makes a difference.  Waiting to hear back.  For me it's still a possibility,  the charges are low, but is cheap necessarily the best?  Just interested in other peoples thoughts really,  I know there's probably hundreds of good options out there and I'm first to say I've not much real knowledge in this area. 

Sparky1uk

Thanks xylophone, the fog is lifting already. 

dunstonh

I've been to an IFA who wants to sign me up to SJP, 4.5% one off then 2% annual management charge. So here I am trying to research whether the seemingly high charges will be offset be stellar growth from a superstar investment team.  Do I sound sceptical?

SJP are not IFAs.  They are tied sales reps of SJP. (own salesforce, own products, own funds). 

What would you do in my situation?  SIPP with HL or Vanguard and a managed fund?If you want advice, you use an IFA. Not a sales rep or FA.
If you  want to DIY then either of those would be fine as both offer simple options.

<br>And would you consolidate the existing funds too?

you need to look a the existing and compare them with the proposed option and check for any special terms/features etc that make the existing plan worth keeping.

 How should i research "trusted" well managed funds?Trust is not really an issue in the case of funds.    Funds have their remit and they will do what they say as long as you stick the mainstream.  If you go off the mainstream and look at things like unregulated funds then you need to take a lot of care and 99% of the population shouldn't be near that sort of thing.

And is it a pipe dream to expect to pay in and let a fund get managed without switching around for the rest of my working life?  The products and investments you buy today are unlikely to be the best in a decade.   So, switching off to it completely may not be a good thing to do.   Financial products are like retail products.  New versions come along that replace old versions.    If you go with a whole of market investment platform, then its more likely that the platform will keep up to date (although others may price better/worse over time).   And a whole of market platform means you can change your investments as you see fit.  Whereas a restricted offering from one place would require you to move it if you wanted a different investment.

I'm considering paying into the Royal London and have already contacted them to ensure I'd be able to make the employer contributions.<br>Nothing wrong with Royal London.  However, their product is a restricted offering in that you only have access to Royal London funds.  And it's an old fashioned personal pension.   Neither of those is necessarily an issue but they don't update old pensions to their latest version.   If someone buys a version 4 policy and ten years later they are on version 17 then those who bought the early versions may be missing out on functionality/options that the newer versions have.   In Royal London's case, that can be seen by those that bought RL pensions around 10 years ago or earlier do not facilitate income drawdown.    That said, their pricing is not bad once you get into the £30k plus range and being a mutual, they return some of their profits to policyholders each year.    They only offer regulated investments and you cant do much wrong with RL.    Not the best.  Not the worst but not a bad option for someone who is clueless about pensions.     

Most pensions will accept employer contributions.  

Sparky1uk

After reading from some links given above about fund selection I'm going to look more closely at the funds used by RL with a  view to using that for now. I've only had it 2 years and I do like the mutual status, it's drawdown and has low charges. Thanks to all! 

Albermarle

dunstonh said:

I've been to an IFA who wants to sign me up to SJP, 4.5% one off then 2% annual management charge. So here I am trying to research whether the seemingly high charges will be offset be stellar growth from a superstar investment team.  Do I sound sceptical?

SJP are not IFAs.  They are tied sales reps of SJP. (own salesforce, own products, own funds). 

What would you do in my situation?  SIPP with HL or Vanguard and a managed fund?

If you want advice, you use an IFA. Not a sales rep or FA.
If you  want to DIY then either of those would be fine as both offer simple options.

you need to look a the existing and compare them with the proposed option and check for any special terms/features etc that make the existing plan worth keeping.

 How should i research "trusted" well managed funds?

Trust is not really an issue in the case of funds.    Funds have their remit and they will do what they say as long as you stick the mainstream.  If you go off the mainstream and look at things like unregulated funds then you need to take a lot of care and 99% of the population shouldn't be near that sort of thing.

And is it a pipe dream to expect to pay in and let a fund get managed without switching around for the rest of my working life?

  The products and investments you buy today are unlikely to be the best in a decade.   So, switching off to it completely may not be a good thing to do.   Financial products are like retail products.  New versions come along that replace old versions.    If you go with a whole of market investment platform, then its more likely that the platform will keep up to date (although others may price better/worse over time).   And a whole of market platform means you can change your investments as you see fit.  Whereas a restricted offering from one place would require you to move it if you wanted a different investment.

I'm considering paying into the Royal London and have already contacted them to ensure I'd be able to make the employer contributions.

Nothing wrong with Royal London.  However, their product is a restricted offering in that you only have access to Royal London funds.  And it's an old fashioned personal pension.   Neither of those is necessarily an issue but they don't update old pensions to their latest version.   If someone buys a version 4 policy and ten years later they are on version 17 then those who bought the early versions may be missing out on functionality/options that the newer versions have.   In Royal London's case, that can be seen by those that bought RL pensions around 10 years ago or earlier do not facilitate income drawdown.    That said, their pricing is not bad once you get into the £30k plus range and being a mutual, they return some of their profits to policyholders each year.    They only offer regulated investments and you cant do much wrong with RL.    Not the best.  Not the worst but not a bad option for someone who is clueless about pensions.     

Most pensions will accept employer contributions.  

I thought normally RL prefer to work via advisors , rather than direct with the public. Or is that just when setting up new pensions ?

dunstonh

Albermarle said:

dunstonh said:

I've been to an IFA who wants to sign me up to SJP, 4.5% one off then 2% annual management charge. So here I am trying to research whether the seemingly high charges will be offset be stellar growth from a superstar investment team.  Do I sound sceptical?

SJP are not IFAs.  They are tied sales reps of SJP. (own salesforce, own products, own funds). 

What would you do in my situation?  SIPP with HL or Vanguard and a managed fund?

If you want advice, you use an IFA. Not a sales rep or FA.
If you  want to DIY then either of those would be fine as both offer simple options.

you need to look a the existing and compare them with the proposed option and check for any special terms/features etc that make the existing plan worth keeping.

 How should i research "trusted" well managed funds?

Trust is not really an issue in the case of funds.    Funds have their remit and they will do what they say as long as you stick the mainstream.  If you go off the mainstream and look at things like unregulated funds then you need to take a lot of care and 99% of the population shouldn't be near that sort of thing.

And is it a pipe dream to expect to pay in and let a fund get managed without switching around for the rest of my working life?

  The products and investments you buy today are unlikely to be the best in a decade.   So, switching off to it completely may not be a good thing to do.   Financial products are like retail products.  New versions come along that replace old versions.    If you go with a whole of market investment platform, then its more likely that the platform will keep up to date (although others may price better/worse over time).   And a whole of market platform means you can change your investments as you see fit.  Whereas a restricted offering from one place would require you to move it if you wanted a different investment.

I'm considering paying into the Royal London and have already contacted them to ensure I'd be able to make the employer contributions.

Nothing wrong with Royal London.  However, their product is a restricted offering in that you only have access to Royal London funds.  And it's an old fashioned personal pension.   Neither of those is necessarily an issue but they don't update old pensions to their latest version.   If someone buys a version 4 policy and ten years later they are on version 17 then those who bought the early versions may be missing out on functionality/options that the newer versions have.   In Royal London's case, that can be seen by those that bought RL pensions around 10 years ago or earlier do not facilitate income drawdown.    That said, their pricing is not bad once you get into the £30k plus range and being a mutual, they return some of their profits to policyholders each year.    They only offer regulated investments and you cant do much wrong with RL.    Not the best.  Not the worst but not a bad option for someone who is clueless about pensions.     

Most pensions will accept employer contributions.  

I thought normally RL prefer to work via advisors , rather than direct with the public. Or is that just when setting up new pensions ?

RL are intermediary only.   However, certain things can be done for existing policyholders without an intermediary.  I am unsure if what the op wants is one of them.

Sparky1uk

My RL plan was originally set up through my employer as a workplace scheme, and since leaving the company they've transferred me to an individual plan.  I don't see any difference in reality, it's just there's no contributions coming from my old employer.  

They've now confirmed they'll accept employer contributions from my limited company on an ongoing basis without an intermediary.  They did say they may have an issue with setting  up regular contributions, but I dont need that anyway.