Short Term Pension Advice

diver10

I am after some short term Pension advice for my wife. We thought that we would be able to rely on my final salary pension which I now draw (since May), but in reality we were very naive in thinking that. We have some savings and own a modest 3 bed semi in North West England but dont want to rely on that either. 

She is 54 years of age and is looking to invest with a "hands off" provider but have some degree of flexibility. Ideally she wishes to retire in around 7 years as this is when her employer is likely to wind down the business. She earns around £2200pcm and could in effect commit up to £1250 pm in a pension. In reality I think she may be comfortable with around half that?

I have looked at SIPPS but they rely on a degree of self management which we dont think we will have the knowledge or experience to manage. 

My wife is concerned that her fund may not grow or even keep up with even the best Cash ISAs; she listens to others in the office whose pensions are not doing well. 

Where can she invest, a simple pension that can be drawn on as and when she decides to retire?  

As with some people our age she is looking to fill that gap between early 60s and SPA. 

We just dont know where to start

NoMore

First place to start is probably her current work pension. This may be a the easiest and if salary sacrifice available most tax efficient way.

dunstonh

I have looked at SIPPS but they rely on a degree of self management which we dont think we will have the knowledge or experience to manage. 

SIPPs can be anything from hands off to giving you anything you want.   

My wife is concerned that her fund may not grow or even keep up with even the best Cash ISAs; she listens to others in the office whose pensions are not doing well. 

The others in the office are unlikely to be accurate.  The stockmarket has doubled over the last 7 years.   Bonds and gilts have had a torrid 2 years period (worst in over hundred years in the case of gilts) but that is over now and has been for over a year.

In reality, its likely that the people in the office don't understand it or are just looking at a past year in isolation and not the years either side.  Broadly speaking, if you take a typical five year period, you have 3 good years, 1 nothing year and 1 negative year.      When that bad year or nothing year comes along, inexperienced investors seem to magically forget the good years.

Where can she invest, a simple pension that can be drawn on as and when she decides to retire?  

A SIPP investing in a low cost multi-asset fund would be cheaper than most Robo pensions

diver10

NoMore said:

First place to start is probably her current work pension. This may be a the easiest and if salary sacrifice available most tax efficient way.

She doesn't have one/an option other than a Stakeholder that she pays £20 a month into. They are a small company which is run by her and a brother. 

NoMore

Is she a director of this company ? Most tax efficient would be to make contributions directly from the company to a pension.

diver10

dunstonh said:

I have looked at SIPPS but they rely on a degree of self management which we dont think we will have the knowledge or experience to manage. 

SIPPs can be anything from hands off to giving you anything you want.   

My wife is concerned that her fund may not grow or even keep up with even the best Cash ISAs; she listens to others in the office whose pensions are not doing well. 

The others in the office are unlikely to be accurate.  The stockmarket has doubled over the last 7 years.   Bonds and gilts have had a torrid 2 years period (worst in over hundred years in the case of gilts) but that is over now and has been for over a year.

In reality, its likely that the people in the office don't understand it or are just looking at a past year in isolation and not the years either side.  Broadly speaking, if you take a typical five year period, you have 3 good years, 1 nothing year and 1 negative year.      When that bad year or nothing year comes along, inexperienced investors seem to magically forget the good years.

Where can she invest, a simple pension that can be drawn on as and when she decides to retire?  

A SIPP investing in a low cost multi-asset fund would be cheaper than most Robo pensions

So most good providers of SIPP would offer a hands off investment (AJ Bell, Vanguard Etc....)?

Ive tried to explain that over the long term it's beneficial, the worry here is that we are relatively short to med term investing. 

Any advice on who to invest with; sorry totally out of my depth here?

diver10

NoMore said:

Is she a director of this company ? Most tax efficient would be to make contributions directly from the company to a pension.

she is one of the directors, yes

Sarahspangles

diver10 said:

NoMore said:

Is she a director of this company ? Most tax efficient would be to make contributions directly from the company to a pension.

she is one of the directors, yes

Have the directors planned for the eventual closure, or for how each will manage to exit? It’s outside my experience but I’ve seen posts where prior planning could have reduced the tax bills.

I have got a SIPP, and it’s not difficult to manage. The platform is no more difficult to use than an online banking app. You then need to choose funds, just as you do in most workplace pensions. The platform probabiy has much more choice, but may suggest some favourite funds which makes it less overwhelming. Users of this forum can’t advise but will normally comment on choices.

dunstonh

she is one of the directors, yes

Is her pension contribution a personal contribution or employer contribution?
It should be employer contribution as there is more tax saved that way.

Stakeholder pensions are largely obsolete now (or perhaps niche would be a better word).   However, she could use that.      The main difference between a SIPP and a stakeholder pension is the SIPP has over 30,000 invest options whereas the stakeholder has around 20 (typically).      However, just because the SIPP has over 30,000 options doesn't mean you need to use 30,000.    The same investment styles on the 20 fund stakeholder exist on the SIPP.

So most good providers of SIPP would offer a hands off investment (AJ Bell, Vanguard Etc....)?

The whole point of a real SIPP is investment selection availability.  So, yes.

Albermarle

Sarahspangles said:

diver10 said:

NoMore said:

Is she a director of this company ? Most tax efficient would be to make contributions directly from the company to a pension.

she is one of the directors, yes

Have the directors planned for the eventual closure, or for how each will manage to exit? It’s outside my experience but I’ve seen posts where prior planning could have reduced the tax bills.

I have got a SIPP, and it’s not difficult to manage. The platform is no more difficult to use than an online banking app. You then need to choose funds, just as you do in most workplace pensions. The platform probabiy has much more choice, but may suggest some favourite funds which makes it less overwhelming. Users of this forum can’t advise but will normally comment on choices.

The difference with a workplace pension, is that if you do not choose an investment fund(s) your money will go into their default fund. I think >95% of workplace pension holders are in the default fund.
When you add money to your SIPP, it will sit in cash until you instruct them what to do with it.

OP - Most pension providers do not manage the pension investments for you. However as said above some have informative websites and suggest some simpler options to choose from.
There are robo advisor/managed pensions where on the basis of answering a few questions, they will choose some basic investments for you . However this is a basic service and you will get no input about your tax, or advice on how to contribute from your company ( like mentioned above) or any other personal finance matters. They will charge for this.
You can pay an IFA for personalised financial advice.
You can learn the basics your self. This forum can be very useful for that.

LHW99

My wife is concerned that her fund may not grow or even keep up with even the best Cash ISAs; she listens to others in the office whose pensions are not doing well.

NoMore said:

First place to start is probably her current work pension. This may be a the easiest and if salary sacrifice available most tax efficient way.

She doesn't have one/an option other than a Stakeholder that she pays £20 a month into. They are a small company which is run by her and a brother. 

The two statements in bold seem rather contrary. Who are these "others in the office", if it's only her and a brother (presumably also a director?). Are they not employees of the company?