Looking to start a pension - advice needed

Secret2ndAccount

Open a SIPP with Vanguard or Fidelity, or ...       Deposit your funds before April 5th.
Then you can take your time to decide between SIPP (cheap, but you might make a costly mistake running it yourself) or IFA (expensive, but everything is looked after for you). Should not be any big charges for transferring a SIPP to an IFA. Not if he wants your business. IFA will take a piece of any money that goes under his management, but shouldn't cost extra for a SIPP.
You can deposit up to 80% of your profits for this tax year. That's not the profit on the tax form you filed a while back - it's your estimated profits for this tax year.
If those profits are over 40k, you run into the annual limit of 40k on all pension contributions in total. However, in some cases, you can use the leftover from prior years' 40k to add more than 40k for a couple of years. This only works if you had some sort of pension up and running in those prior years.
There are fine details, and exceptions, but, based on what you've said, this likely covers your situation.

bpk101

Dazed_and_C0nfused said:

Do you expect your taxable profit to exceed £40,000 in 2022:23?

Yes, expected to be around £65,000

NSG666

As above, better to do something now and possibly change it lately rather that get bogged down trying to decide what to do and end up doing nothing.
Again Target Retirement Funds better than doing nothing.
Vanguard don't charge you to switch between funds (funds clarified on their web-site) or to transfer out of your SIPP to another provider.

bpk101

Secret2ndAccount said:

You can deposit up to 80% of your profits for this tax year. That's not the profit on the tax form you filed a while back - it's your estimated profits for this tax year.
If those profits are over 40k, you run into the annual limit of 40k on all pension contributions in total.

Estimated profits for 2022/23 are £65,000. As i'll only be personally contributing £500 a month / £6,000 for the year i'm well short of the £40k limit.

Does the amount of the deposit take into account the additional 20% basic rate tax relief? If so, it will still only amount to £7,500. Even if i'm able to increase contributions to £750 (£937.50) or £1,000 (£1,250) as the year goes oni'll still be well within my 80% limit. 

Secret2ndAccount said:

or ...       Deposit your funds before April 5th.

Do you mean in a cash ISA, or elsewhere?

My initial worry on doing this was that i'd be missing out on the added 20% basic rate relief plus the additional 20% higher rate relief i can claim back if it just went into a instant access ISA, but i guess that would all just get added at a later date when i do transfer it to a pension? However i would miss out on 'time in the market' and the benefits of compounding interest whilst i wait to make a decision. Unless you're suggesting an S&S ISA?

bpk101

NSG666 said:

Vanguard don't charge you to switch between funds (funds clarified on their web-site) or to transfer out of your SIPP to another provider.

Good to know! 

NSG666 said:

As above, better to do something now and possibly change it lately rather that get bogged down trying to decide what to do and end up doing nothing.

Yes, this is where my thoughts are at... the last thing i need is an excuse to stall for even longer!

NSG666 said:

Again Target Retirement Funds better than doing nothing.

I presume a Life Strategy fund will be much the same choice if i do plan to switch providers at some point? I think i read somewhere that they're almost identical in terms of portfolio and performance, just the TRF auto de-risks where the LS you need to de-risk manually when the time comes.

Audaxer

bpk101 said:

NSG666 said:

Vanguard don't charge you to switch between funds (funds clarified on their web-site) or to transfer out of your SIPP to another provider.

Good to know! 

NSG666 said:

As above, better to do something now and possibly change it lately rather that get bogged down trying to decide what to do and end up doing nothing.

Yes, this is where my thoughts are at... the last thing i need is an excuse to stall for even longer!

NSG666 said:

Again Target Retirement Funds better than doing nothing.

I presume a Life Strategy fund will be much the same choice if i do plan to switch providers at some point? I think i read somewhere that they're almost identical in terms of portfolio and performance, just the TRF auto de-risks where the LS you need to de-risk manually when the time comes.

You can have Vanguard Life Strategy funds with most major online investment platforms. I think they are a good choice although they have a relatively high percentage of UK equity compared to some other multi asset funds like for example HSBC Global Strategy funds.

Depending on your risk will determine how much you want to de-risk at retirement - some people choose to still have a high equity percentage at retirement, so good to have the option rather an automatically de-risk with the TR funds in my opinion.

NSG666

bpk101 said:

NSG666 said:

Vanguard don't charge you to switch between funds (funds clarified on their web-site) or to transfer out of your SIPP to another provider.

Good to know! 

NSG666 said:

As above, better to do something now and possibly change it lately rather that get bogged down trying to decide what to do and end up doing nothing.

Yes, this is where my thoughts are at... the last thing i need is an excuse to stall for even longer!

NSG666 said:

Again Target Retirement Funds better than doing nothing.

I presume a Life Strategy fund will be much the same choice if i do plan to switch providers at some point? I think i read somewhere that they're almost identical in terms of portfolio and performance, just the TRF auto de-risks where the LS you need to de-risk manually when the time comes.

I'm not recommending anything but I have been looking at the various options with Vanguard and I do like the idea of the LS funds but I also have in the back of my mind "If I got run over by a bus and killed what would be the best option for my wife who has zero knowledge of investments". Although TRFs might not be the best option for many, for her (hence me) they could be ideal but I'm undecided.

Bimbly

Secret2ndAccount said:

or ...       Deposit your funds before April 5th.

Do you mean in a cash ISA, or elsewhere?

What they mean is...

Open a Vanguard Sipp now, deposit money before April to get your tax relief for the year. Choose a retirement target fund or a life strategy. Start contributing.

In the meantime, consider using the IFA to set up a pension for you.

That way, you get the ball rolling and take your time in considering while route you want to go down. If you go the IFA route, then they can sort transferring out of Vanguard into their scheme when ready.

bpk101

Bimbly said:

What they mean is...

Open a Vanguard Sipp now, deposit money before April to get your tax relief for the year. Choose a retirement target fund or a life strategy. Start contributing.

Oh i see, i don't have a lump sum to deposit now for this current tax year unfortunately, only the monthly contributions i've factored into my new budget starting in April. 

Bimbly said:

In the meantime, consider using the IFA to set up a pension for you.

That way, you get the ball rolling and take your time in considering while route you want to go down. If you go the IFA route, then they can sort transferring out of Vanguard into their scheme when ready.

I think this is what i'm inclined to do then, negates the risk of me tying myself in more knots and running out of steam with the whole endeavour as i try to decide on a longer term pension strategy and ultimately doing nothing.

If switching providers later is fairly straightforward then i can spend more time researching my options whilst (finally) putting some money away somewhere until i decide. 

bpk101

Perhaps a question for a different thread but if i was to opt for a Vanguard LS or TRF whilst i mull over options for the longer term plan, what are the pro's and con's of going directly through the Vanguard platform vs. say the Fidelity platform?

I use the Fidelity platform already for my child's S&S iSA. In one respect i can see the convenience in having everything under one roof, but on the flip side i can also see the benefit of having them separate just in terms of keeping them as separate entities in my mind. It would also be good to 'try out' another platform just from a user performance point of view. Obviously not if the fees or terms are massively different though.