Pensions and cashback

OwnedByACat

Hi apologies if this is a stupid question but I've just started looking into this. I'm self-employed and about to take out a private pension. Some providers offer cashback for new customers. Can I just open as many of these as I can, depositing the minimum amount and keeping it there for the minimum amount of time, and then consolidating the pensions at a later date? 

Also, I've maxed out my ISA amount for this tax year, is there any benefit to waiting and taking out Stocks and Shares ISAs instead of a SIPP?

eskbanker

OwnedByACat said:

Hi apologies if this is a stupid question but I've just started looking into this. I'm self-employed and about to take out a private pension. Some providers offer cashback for new customers. Can I just open as many of these as I can, depositing the minimum amount and keeping it there for the minimum amount of time, and then consolidating the pensions at a later date?

There's no limit to the number of pensions you can have, and there's no need to consolidate them unless you want to.  There are overall annual contribution limits but provided you don't fall foul of these then you can pay into as many as you wish.

OwnedByACat said:

Also, I've maxed out my ISA amount for this tax year, is there any benefit to waiting and taking out Stocks and Shares ISAs instead of a SIPP?

Pensions will usually beat ISAs in financial return terms, but won't accessible until you're 55/57, whereas ISAs can be accessed at any time, if that's a factor for you.

Albermarle

For the cashbacks you will have to read the T's & C's of the deals very carefully, to make sure you do get them .I think the cashbacks for new customers depositing modest amounts, will not be that great ( £100?), so it comes down to whether it is worth the possible hassle or not.
There are also cashbacks on offer when you transfer pensions, but usually they have to be of a reasonable minimum size ( £25k?) 

Otherwise pension is better than ISA is saving for retirement, due to the tax relief. If you think you might need the money earlier than a S&S ISA could be better.

artyboy

I started a thread on this a couple of years back because to me it seemed like money for old rope - ok that's an oversimplification because not all pension transfers are simple, but typically a transfer between 2 'modern' SIPPs is really no more difficult than a current account transfer.

Anyway, I've made about £15k in cashback since then, albeit I do have a large amount of pension assets to shift around. I'm currently sitting on 4 seperate pension pots but have had as many as 7 in the past.

OwnedByACat

artyboy said:

I started a thread on this a couple of years back because to me it seemed like money for old rope - ok that's an oversimplification because not all pension transfers are simple, but typically a transfer between 2 'modern' SIPPs is really no more difficult than a current account transfer.

Anyway, I've made about £15k in cashback since then, albeit I do have a large amount of pension assets to shift around. I'm currently sitting on 4 seperate pension pots but have had as many as 7 in the past.

yes it seemed easy-ish money, thought I was maybe missing something. do you have any tips?

Alexland

OwnedByACat said:

yes it seemed easy-ish money, thought I was maybe missing something. do you have any tips?

Consider what charges you would pay the new provider during the minimum period you are required to stay with them as some eye catching cashback deals are really poor value where they are giving you less than it will cost in fees to run the account.

If you are looking to transfer existing pension(s) consider if you are losing any valuable benefits or will suffer time out of the market where market movements up or down might dwarf the cashback being offered.

Consider if you actually like the investment choices being offered and if the fund costs are reasonable.

artyboy

Alexland summed it up nicely, just to add that if you're already invested in mainstream investments through a SIPP, you should be able to transfer "in-specie" to a new SIPP - that eliminates any out-of-the-market risk because you remain invested throughout the transfer process.

OwnedByACat

Thank you I will certainly bear fees in mind.

michaels

Often due to charging structures, fees are minimised if you hold the same investments as ETFs rather than as traditional funds.

Some of the robo investors offer seemingly decent cashback but you are then forced onto their expensive and limited product range so personally I would steer clear of these if only switching to pocket the switch offers.

OwnedByACat

I don't have much knowledge about stocks/shares so robo investing is something I might do anyway

Alexland

Robos are fine for playing around and picking up new customer cashback although their signup offers tend to be less lucrative these days.

However their total ongoing costs tend to be at least double a low cost DIY option with a multi asset fund so too expensive for large amounts of money or anyone that cares enough to learn a bit more about investing.

They usually offer bespoke portfolios with a similar asset mix to a multi asset fund but when transferring out at the end of the offer minimum period you generally end up in cash with the randomness of time out of the market which might be a concern on meaningful account valuations.