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Starting pension advice please

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Hi I am 34, I am fortunate to own my own house worth approx £250000 but I have very little knowledge of pensions and realise I need to start somewhere.
I am about to go freelance so my salary will be approx £30000..
I am looking at whether to open SIPP or S&S isa any advice would be much appreciated.

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  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,616 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    Hi I am 34, I am fortunate to own my own house worth approx £250000 but I have very little knowledge of pensions and realise I need to start somewhere.
    I am about to go freelance so my salary will be approx £30000..
    I am looking at whether to open SIPP or S&S isa any advice would be much appreciated.
    How will you be trading?  Self employed or company?
  • Brie
    Brie Posts: 14,750 Ambassador
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    Even though your years away from pensionable age I'd start by looking at your pension forecast on the gov.uk website.  

    And then you need to think if you'll have enough money for whatever your freelance enterprise is.  I think lots of people overestimate how much income they will have so might need to dip into savings.  So as great as getting a reasonably early start on building a pension can be it won't be accessible if you need and cash in the next couple of years.  So my thought would be to do a split between a cash and a S&S ISA so you have easily accessible ££ without having to worry about this year's tempestuous stock market. 
    I’m a Forum Ambassador and I support the Forum Team on Debt Free Wannabe, Old Style Money Saving and Pensions boards.  If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.

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  • dunstonh
    dunstonh Posts: 119,712 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I am looking at whether to open SIPP or S&S isa any advice would be much appreciated.
    Pension beats ISA so that is your first decision made.

    Your reference to freelance suggests a limited company rather than a sole trader.  So, again, that favours pension with employer contributions.  If under an umbrella company, then things will be a little different.

    However, new business may result in unsteady income and you need to make sure you have a sufficient cash savings pot (neither S&S ISA or pension).
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • cloud_dog
    cloud_dog Posts: 6,326 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    For earnings within the basic rate tax band, a LISA is more efficient than a pension BUT, there are many things to consider / be aware of here.

    If you ever needed to claim means tested benefits then the LISA money would be included in any calculation and if significant you would be required to draw on those monies irrespective of any LISA withdrawal penalty you may incur.  Pensions are excluded from these calculations (prior to retirement age).

    How quickly do you think your business venture might grow?

    For this I am thinking in terms of utilising a limited company (where company pension contributions would be efficient), or where you may find yourself paying tax in the higher rate band?

    If the above is a possibility at some point in the near(ish) future you could simply use a ISA for now, and then use any accrued ISA money to subsidise larger pension contributions via the limited company or if you are in the HRT bracket.
    Personal Responsibility - Sad but True :D

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  • Adagiopace
    Adagiopace Posts: 3 Newbie
    First Post Photogenic
    Thank you very much for your advice.
    I will be self employed and do not anticipate hitting the higher tax bracket anytime soon.
  • Eyeful
    Eyeful Posts: 955 Forumite
    Fourth Anniversary 500 Posts Name Dropper
    edited 25 April at 3:42PM
    1. Use of tax free shelters. 
    (a) Pension for long term investing. The longer the better. 
    (b) Stocks & shares ISA's if you can leave the money untouched for at least, lets say 10 years.
    (c) Cash ISA's for money you will need within 5 years.

    2. Pensions are not taxed on the way in but on the way out.
    You are already taxed on the money going into an ISA, but will not be taxed on the money coming out.

    3. Pensions beat S&S ISA's.
    When you put £80 into the pension you get to invest £100, this is because of the tax relief you get. So your money is up £20, right away.
    You do not get this with a S&S ISA.
     https://www.ii.co.uk/ii-accounts/sipp/sipp-investment-ideas/target-retirement-fund

    4. This may be of interest to you.
     https://www.youtube.com/watch?v=K18RRBNdkQA



  • Adagiopace
    Adagiopace Posts: 3 Newbie
    First Post Photogenic
    I know this is a big question but with current downturn would you advise just think long term and open a SIPP now?
  • eskbanker
    eskbanker Posts: 37,217 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    I know this is a big question but with current downturn would you advise just think long term and open a SIPP now?
    Not really a big question but certainly not a big answer: "yes"!

    Or to be more specific, if you have adequate liquid funds and are ready to start planning for your retirement then don't be influenced by short-term market conditions, which really aren't particularly unusual in the overall scheme of things, i.e. there'll be numerous bigger crashes between now and when you retire....
  • Eyeful
    Eyeful Posts: 955 Forumite
    Fourth Anniversary 500 Posts Name Dropper
    edited 25 April at 10:15PM
    1. If you have no debt (except a mortgage)
    Have an emergency fund to cover 12 months of household builds
    Are not struggling to make ends meet.
    Then the answer is "YES, the sooner the better".

    2. If you are going to invest long term:
     You will have to get use to seeing many down turns and reasons to not invest. It comes with the territory.
    Examples:

    https://www.investopedia.com/thmb/6Vst30-km_XecszfWJjrIQqGWvw=/1816x912/filters:no_upscale():max_bytes(150000):strip_icc()/2019-03-08-MarketMilestones-5c82eebe46e0fb00010f10bd.png

    https://urbestnews.blogspot.com/2025/03/navigating-todays-stock-market-closer.html

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