Personal SIPP for non-earner

Hal17

Good Afternoon, I have just received a message from my niece who has asked me to help her understand the workings of a personal pension.

She is a non-earner due to health issues but is keen to start her first pension. So her contributions will only be £2,880 per tax year until she is able to make additional contributions once she is able to commence employment.

In terms of possible platforms to use, I am looking at Dodl (AJ Bell) or Invest Engine as a low cost option. I know Vanguard increased their charges for pots under £32K.

If anyone has recent experience of this type of scenario, I would appreciate your thoughts. 😎

QrizB

I have a small pension with Dodl. It's a doddle 😆 I pay £240 a month into it. The tax relief turns up eventually.

I haven't set up automatic investments so once a month I tell it where to put my money.

I try to keep a small cash float to cover my monthly charges.

squirrelpie

I closed my InvestEngine account because I couldn't get on with their website. YMMV.

MeteredOut

As a starter, I'd be choosing a no/low cost provider.

I've had no issues with InvestEngine for one of my small pots, and I'd recommned looking at them or T212.

Low cost platforms may have limitations (eg, orders executed on bulk once a day, not when you place the order, or the bid/offer spread may be a bit higher than elsewhere) but it doesn't sound like your niece is going to be day trading or making many trades.

Any platform that charges a monthly fee (even £5-10/month) is going to eat into her capital and therefore her returns. These platforms make their money by offsetting buys and sells across their customers.

Edit: if you or her know anyone with a T212 account, i think they currently have referral offer where they can get a free fractional share worth £8-100. Not a reason to select them but worth doing if that's their choice.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82168876#Comment_82168876

Then again if you chose a mainstream provider with a % base charge, the fees would be very small on £3k.

Marcon

Why a SIPP? A non-SIPP personal pension is likely to be a better choice given her lack of financial sophistication - and could be cheaper.

When she returns to employment, her employer will have their own choice of auto-enrolment scheme, so hopefully this will just be a stopgap for what will prove to be a soon to improve period of ill health.

Hal17

https://forums.moneysavingexpert.com/discussion/comment/82169104#Comment_82169104

Thank you Marcon that is very helpful and thoughtful.

Looking at Dodl it seems that they have a management charge of 0.15%, with a minimum charge of £1.00 per month, so £12.00 per year. She is keen to understand pensions so is currently doing some research herself, but I know she is keen to use an App based provider.

Marcon

Good for her for thinking ahead, especially when she's not in the best of health. If she's not yet come across it, the MoneyHelper website has lots of useful info for those with pension L-plates: https://www.moneyhelper.org.uk/en/pensions-and-retirement

MeteredOut

https://forums.moneysavingexpert.com/discussion/comment/82169048#Comment_82169048

Agreed, but not zero. And some have a minimum monthly charge too.

Its not clear if the niece wants to make a one-off payment, or drip over months, which could also determine the best choice.

LHW99

Dodl is a reputable brand, backed by AJ Bell, but in all cases it isn't the pension platform (the co that holds the pension) that performs, but what goes into it. And even then it's not possible to really judge over a year or so.

Choose a global tracker, or a multi-asset fund, pay in regularly, and don't look at it too often. After 10-20 years he benefit will (hopefully) be seen.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82169184#Comment_82169184

 she is keen to use an App based provider.

There are a few app only providers, but most pension providers have an app anyway.