Do I need an IFA? If so why? What is the alternative?

LHW99

Think of it like fitting a new electric circuit in your house.

You could DIY if you know what you're doing, but paying for an expert ensures it meets your needs, and is safe (though that doesn't necessarily apply to DIY finance unless you fall for a scam!) and may also point out things you haven't thought of - switches / sockets needing changes elsewhere (in this case eg tax / IHT implications).

artyboy

slaney said:

All useful advice.  

I'm an IT contractor who provides services through an umbrella company and is inside the IR35 legislation. I make several hundred daily but am not paid for sick or holidays.  So, I am neither a limited company nor a sole trader.  I am an employee of the umbrella company.  I make more than £150k gross a year paid in dribs and drabs depending on how much I have worked that week.  

I currently pay about 52% tax on my earnings - including paying employers' NI and employees' NI - and want to change that situation to offset tax into my pension.  

Peers keep telling me I need a SIPP and to put as much as possible into a pension pot. Umbrella company started a pension with some company and puts some into that.  I would rather they didn't. 

  

I have bits of pensions everywhere going back to the 1980s when I started working at 16. I don't know how much they are worth.  I need to get a sense of where I am at.  I have put something into a pension for years but change jobs often. I can't remember all of the jobs I have done over the years, to be honest. I used to work in all sorts of jobs, from factory work to estate agent.  

The idea of my pension being like a bank account is that I want to see it all in one place and see the interest I am getting each year.  I would like to see exactly where I am at.  I would like to earn a bit of interest on the money in the pension but I would not want it to get less. 

I am 54.  I have no plans to retire and want to carry on working until at least 70 (I love working, and I love what I do).  I will stop working when I can't do what I do because I am dead or ill.  But sometimes, when I am older, I will work for half the year and then travel for the other half of the year or be a digital nomad.  Hopefully, I won't have to rely on savings until I am at least 75. 

I didn't ask for investment advice or someone to invest a portfolio.  I just asked on that unbiased website for someone to help me find all of my pensions and combine them so I can see where I am at because I am a pretty busy person, and I would like to handle the problem of filling out the paperwork for all of the pension stuff to someone else.  Then, I want the umbrella company to pay into that pension.  

Still not sure if I want to pay £3k for someone to combine pensions. 

Most higher paid IT contractors I know would have operated through a limited company until a few years ago when firms started to get nervous about IR35 and the shakiness of 'substitution' clauses in contracts (that were the common justification for the arrangement). 

Tax-wise it was far better (if managed properly) than being a regular employee on PAYE. Which is why IT contractors never wanted to go perm.

So not sure if you were one of those that had to accept moving inside IR35, but the whole 'paying employer NICs' thing was one of the most contentious aspects for people affected, and often they were able to get a better rate to compensate. Either way, the gravy train of paying oneself dividends at a lower tax rate came to an end. It was nice while it lasted, but it was frequently abused, especially in my industry where it was really masked employment.

Anyway.. all that said, I'm hoping you were at least compensated via your pay rate for the fact your effective tax rate was going up. But if you're not now stuffing the full £60k into your pension every year, then you are IMO missing a very big trick. I'll let others comment on the rights or wrongs of what you then invest it in.

xylophone

I have the common problem of having worked for 30-plus years in many companies, leading to pensions all over the place and lots of lost pensions.  I have not been very active in managing these or keeping them current. 

When you lose track of/forget that old pension.........

https://www.thisismoney.co.uk/money/pensions/article-12775633/Meet-pensions-vigilante-taking-Scottish-Widows-task-HUNDREDS-complaints.html

This summer, Nicola Davies decided to check in on her workplace pension pots ahead of her 55th birthday.

The mother-of-two, from Tamworth in Warwickshire, has worked for the NHS since 2006 and has an older workplace pension saved with Scottish Widows from a previous job.

In August, Nicola realised she had not had an annual pension statement from Scottish Widows since 2015,...............

and the horror story follows......