Paying into a SIPP when reliant on UC - any advice?

PostHoc25

Randomly started thinking about pensions today. I am 50 and reliant on UC for health issues. I sincerely doubt I will return to work so am pondering if I should try and pay into a private pension/SIPP of some sort now to help bolster any state pension I qualify for.

Would £25 paid in a month + some fees be worth it? Or should I just save that amount elsewhere? 

I want it to be ethical and the benchmarking from The Good Shopping Guide has 8 top ranked providers for this - see screengrab/link below. Does anyone have experience of SIPPS with any of them?

Any thoughts on this topic would be appreciated.  
Many thanks and happy new year!

Pensions: Ethical Comparison - The Good Shopping Guide

michaels

You can pay in 2880 and get this grossed up to 3600.  If you do have any other income that reduces your UC, the pension payments can be deducted from this, increasing your UC.

So potentially if you pay in 80p of income into a sipp your UC increases by 55p and you get £1 in your pension so for a net contribution of 25p you get £1 into your pension.

dunstonh

I want it to be ethical and the benchmarking from The Good Shopping Guide has 8 top ranked providers for this - see screengrab/link below. Does anyone have experience of SIPPS with any of them?

That ranking guide seems a bit BS to me.

Aviva, Interactive Investor and Fidelity all offer whole of market platforms.   So, all three share the same investment options. i.e. the same retail ethical funds.   Yet it ranks the three of them differently and bizarrely rates 6 providers with extremely limited investment options and a fraction of the ethical funds available, higher than Fidelity.

Only 3 of the providers in that list have a SIPP.  The others are robo-providers, auto-enrollment schemes, stakeholder pensions or personal pensions.

PostHoc25

Imichaels said:

You can pay in 2880 and get this grossed up to 3600.  If you do have any other income that reduces your UC, the pension payments can be deducted from this, increasing your UC.

So potentially if you pay in 80p of income into a sipp your UC increases by 55p and you get £1 in your pension so for a net contribution of 25p you get £1 into your pension.

Thanks, no, I only have UC, no other income.
I just wonder if it makes more sense to get 1,2,5, year fixed savings account instead of a pension and just keep moving it, but in terms of potential growth, I'm in the dark as to what might be best. The whole pension thing is new to me but I hope to book a government pension advice call in the coming weeks to see what they might advise.

PostHoc25

dunstonh said:

I want it to be ethical and the benchmarking from The Good Shopping Guide has 8 top ranked providers for this - see screengrab/link below. Does anyone have experience of SIPPS with any of them?

That ranking guide seems a bit BS to me.

Aviva, Interactive Investor and Fidelity all offer whole of market platforms.   So, all three share the same investment options. i.e. the same retail ethical funds.   Yet it ranks the three of them differently and bizarrely rates 6 providers with extremely limited investment options and a fraction of the ethical funds available, higher than Fidelity.

Only 3 of the providers in that list have a SIPP.  The others are robo-providers, auto-enrollment schemes, stakeholder pensions or personal pensions.

Thank you so much. I've gone back to the Good Shopping Guide to ask what clarification they can offer on their rankings. I know Aviva has large investments in defence, which I would consider a no-no, even if my small pot of money was technically being put elsewhere.  I suspect in reality, large firms are all much the same and as you say, have overlapping ethical investment options anyway. I can see this is going to take me down several rabbit holes!

Happy New Year!

dunstonh

I know Aviva has large investments in defence, which I would consider a no-no, even if my small pot of money was technically being put elsewhere.

The pension provider and the investments are two different things.    Aviva is both a product provider and it also offers its own funds.  However, you dont need to use Aviva funds in an Aviva SIPP.      You can also hold Aviva funds in a Fidelity SIPP or Interactive investor SIPP.

 All of the providers have conventional investment funds that will defence as part of their make up.     They will also have a range of ethical options.  Aviva, Interactive Investor and Fidelity are all whole of market.  So, they will have the widest range as they offer virtually identical investment options.       What that means is that if you identify a specific ethical unit trust or OEIC,  then Aviva, Interactive Investor and Fidelity will offer that fund.  

Or putting it another way.....Say you wanted the Liontrust UK Ethical fund.  That fund is available on ii, Aviva and Fidelity.    So, why is the ethical score different?

The bottom line is that the provider is not that important for ethical considerations when it comes to SIPPs.    It is the investments that matter and SIPPs, being whole of market, share the same investments.

 I've gone back to the Good Shopping Guide to ask what clarification they can offer on their rankings

Their response would be interesting.

Further to the above, both Aviva and Interactive Investor use the same software provider, FNZ.   FNZ control the backend processing.   Only the front end (the website) is controlled by Aviva and II.     So, not only are both whole-of-market in their investment selection, but also the processing and software are the same via FNZ.   Fidelity uses a different external software supplier, but the consumer outcome is the same.

So, if they are that similar in processing and investment selections, why are they so different in the scores?   

PostHoc25

dunstonh said:

I know Aviva has large investments in defence, which I would consider a no-no, even if my small pot of money was technically being put elsewhere.

The pension provider and the investments are two different things.    Aviva is both a product provider and it also offers its own funds.  However, you dont need to use Aviva funds in an Aviva SIPP.      You can also hold Aviva funds in a Fidelity SIPP or Interactive investor SIPP.

 All of the providers have conventional investment funds that will defence as part of their make up.     They will also have a range of ethical options.  Aviva, Interactive Investor and Fidelity are all whole of market.  So, they will have the widest range as they offer virtually identical investment options.       What that means is that if you identify a specific ethical unit trust or OEIC,  then Aviva, Interactive Investor and Fidelity will offer that fund.  

I suppose my concern is that by choosing Aviva at all (for example), in some way, their defence investments would be supported by me, simply by me becoming a customer, regardless of them offering ethical pension options. I guess I am looking for an ethical provider that is itself ethical in its own investments, regardless of how ethical the pension offerings are to their customers. It's interesting that they are all effectively offering the same choices and with the same software too!

I've been rummaging around this evening and came across The Path who sound promising as a different route
 Path Financial - Ethical pensions and investments who offer a free initial consultation.

I do suspect that due to how little I have to invest, I may struggle to find something/someone who sees me as a good business investment for them, but I'm enjoying the research nonetheless.

Will update when the Good Shopping Guide come back to me

dunstonh

I suppose my concern is that by choosing Aviva at all (for example), in some way, their defence investments would be supported by me, simply by me becoming a customer, regardless of them offering ethical pension options.

If that is the case, you would have to rule out all the others as well, as they, too, have conventional investment options available to those who do not share your ethics.      

I've been rummaging around this evening and came across The Path who sound promising as a different route
 Path Financial - Ethical pensions and investments who offer a free initial consultation.

That is an advice company.  They are not a pension provider and not an investment company.   They will use an investment platform to put in place the investments they are recommending.   That investment platform will almost certainly be a whole-of-market platform, like Fidelity, Aviva, or one of the others available to advice firms.

PostHoc25

dunstonh said:      

I've been rummaging around this evening and came across The Path who sound promising as a different route
 Path Financial - Ethical pensions and investments who offer a free initial consultation.

That is an advice company.  They are not a pension provider and not an investment company.   They will use an investment platform to put in place the investments they are recommending.   That investment platform will almost certainly be a whole-of-market platform, like Fidelity, Aviva, or one of the others available to advice firms.

Had a quick chat with Path. As you say, they are wealth management/Financial advisors but very helpful. Gave me some links to check out (Aviva again!) But they acknowledged there is a gap in the market for low income ethical investors like myself and are working to try and find options in the future. I also appreciated her candor concerning their fees likely eating into any investments under £100K which I felt was likely, but a helpful chat nonetheless. Most pleasing that as an ethical company themselves, they are aware of the gap in the market for low income investors, and also the sticky issue of a company offering ethical products whilst not being ethical themselves! As you say, it is what it is currently, with everyone sharing the same options.

Anyway, here are the links in case others find them useful, although I am sure they are probably somewhere on MSE

Pensions:

• Aviva (https://www.aviva.co.uk - ethical investment options)
• Wealthify (https://www.wealthify.com - for Pension and ISA/GIA options)
• The Big Exchange (https://www.bigexchange.com - for ISA/GIA options)

You may also find these links useful:

• Ethical Fund Guide (https://www.fundecomarket.co.uk)
• Ethical Consumer Guides (https://www.ethicalconsumer.org, https://thegoodshoppingguide.com)
• State Pension Age Calculator (https://www.gov.uk/state-pension-age)
• State Pension Forecast (https://www.gov.uk/check-state-pension)
• Pension Calculator (https://www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/pension-calculator)
• A Consumer Guide to Sustainable Investment Funds (https://uksif.org/uksif-guide-a-consumer-guide-to-sustainable-investment-funds/)

dunstonh

• Aviva (https://www.aviva.co.uk - ethical investment options)

Just noting that Aviva is only noting its own brand funds and not the ethical funds that are available on its whole of market platform.

Albermarle

 But they acknowledged there is a gap in the market for low income ethical investors like myself and are working to try and find options in the future.

There is in fact a gap in the market for all low value investors, who can not access financial advice. It is not just an ethical issue.

I hope to book a government pension advice call in the coming weeks to see what they might advise.

You will get no personal financial advice from the Govt., only general guidance.
If you mean 'PensionWise' their service is anyway geared to people about to withdraw from a pension, not adding to one.