Stop my Halifax stakeholder pension?

rik_t

Hi,

I am 26 and have been paying into my Halifax stakeholder pension for 3 years now, I had to set this up myself as I do not have a work pension. Before that I worked in the Civil Service and obviously had their pension which is now locked down.

I am worried about whether I made the correct choice choosing the Halifax pension as I have no knowledge on pensions really. I am worried I am paying all this money each month and whether its going to be worth it.

I'm after some advice really, am I doing the right thing or is there better options out there for my money?

Thank You

dunstonh

I am worried about whether I made the correct choice choosing the Halifax pension as I have no knowledge on pensions really.

Charges are stakeholder standard so no problem there. Fund choice on offer is pretty rubbish but that is normal for banks.

I am worried I am paying all this money each month and whether its going to be worth it.

Anything you put aside is worth it unless you fancy living on £4500 a year state pension.

I'm after some advice really

Not possible to give advice via the forums. It would breach FSA rules. Anything posted is for discussion only.

am I doing the right thing

Right idea, just wrong provider.

or is there better options out there for my money?

Yes there are. There will be cheaper and better options. How much so will depend a lot on your ability to understand the options but even if you stick with a stakeholder pension you will still have better options.

rik_t

Can any companies/products not be recommended? surely recommendations are okay?

dunstonh

rik_t wrote: »

Can any companies/products not be recommended? surely recommendations are okay?

Pension advice is regulated by the FSA. Therefore no recommendation can be made without meeting their rules. If I posted recommendations I would be in breach of those rules. Its not worth the risk to either myself but also the board (for allowing me to break the rules).

Plus, we know nothing about you. There is no one best option. There are about 150 different pensions and 38,000 odd investment funds and countless more investment options.

Its possible to steer you away from a bad option but it isnt possible to say this one is best for you.

Bank products are generally expensive, have low quality investment funds and have staff who are not proper financial advisers but insurance company reps who cannot advise on the actual investments within the fund (hence you end up usually with single fund solutions). You should avoid bank products wherever possible. Supermarket pensions are naff as well (i.e. Tesco is a cut down version of the Norwich Union stakeholder, Virgin Stakeholder is one of the worst you can get).

EdInvestor

rik_t wrote: »

I am 26 and have been paying into my Halifax stakeholder pension for 3 years now, I had to set this up myself as I do not have a work pension.
Are there better options out there for my money?

Yes. Ideally you want a pension which gives you access to "external funds" , ie the ones offered by fund management companies, not the "inhouse funds" offered by the pension providers themselves.

Scottish Widows and Standard Life both have pensions offering a good selection of external funds.For the best choice you need a SIPP ( self invested personal pension), which is best opened via a discount broker such as https://www.h-l.co.uk which will rebate the charges on the funds.

Have a look around the HL site to get an idea about these better performing external funds. There's no doubt that if you can get a good selection of them in your pension it will perform far better than the norm.Does require a bit of effort, but there's plenty of info on MSE (try the investment forum).

dunstonh

which is best opened via a discount broker such as www.h-l.co.uk which will rebate the charges on the funds.

Bit misleading. HL dont rebate any of the annual management charge and with the typical amc being 1.5%, then that is more than the 1% charged on the average stakeholder pension. SIPPs are for experienced investors and the OP just isnt at that level.

EdInvestor

dunstonh wrote: »

SIPPs are for experienced investors and the OP just isnt at that level.

There's not really a lot of difference IMHO between researching and choosing a selection of external funds within a lifeco personal pension and researching and choosing a similar selection of funds within a SIPP.The costs are much the same (higher than a stakeholder, but for good reason.) However in the SIPP you have the full choice of the best funds, with the PP there is a cut down selection (which may have the ones you want.if so fine for the moment at least.)

Of course SIPPS also allow you to invest in shares, gilts, ITs, commercial property etc, which are areas for experienced investors, but as you so often mention yourself, many SIPP investors don't use these options.

IMHO anyone considering a PP with external funds should also consider a cheap online SIPP through a discount broker as both products require similar investor skills.

PasturesNew

Speaking as somebody who has no pension, I read this thread, as I read others, hoping that I will see some spark of something that will be meaningful .... and yet again, I found my eyes glazing over and I have NO idea what any of that means/is going on.

I hope the OP finds a resolution.

I am now too old to start a pension and never did understand it.

EdInvestor

A personal pension is just like an ISA, they are both wrappers which provide tax benefits for the money inside them.The important thing is how you invest the money inside the wrapper.Typically this involves selecting funds. Getting a good selection is the key to the long term performance of the pension.

Of course there are other different types of pensions where funds are irrelevant so it's not surprising people get confused.

dunstonh

There's not really a lot of difference IMHO between researching and choosing a selection of external funds within a lifeco personal pension and researching and choosing a similar selection of funds within a SIPP.

There is. Its called time and knowledge and a willingness to keep doing it.

The costs are much the same (higher than a stakeholder, but for good reason.)

No they are not. Around 90% of SIPPs post A day invest in funds. The typical amc for funds is 1.5% for HL. As you have mentioned execution only providers, lets stick with that. A stakeholder on exectution only could be as low as 0.4% amc. Although 0.6-0.7% on a new one with low values. Thats half the cost of the funds in a SIPP.

However in the SIPP you have the full choice of the best funds, with the PP there is a cut down selection (which may have the ones you want.if so fine for the moment at least.)

A mix and match of the best internal and best external funds can again see the PPP being much cheaper than the SIPP.

Of course SIPPS also allow you to invest in shares, gilts, ITs, commercial property etc, which are areas for experienced investors, but as you so often mention yourself, many SIPP investors don't use these options.

Very true. That is why the FSA keeps issuing warnings and concerns that too many people are investing into SIPPs when a stakeholder pension or personal pension would be better and cheaper for them.

The OP chose Halifax as a provider. That alone speaks volumes about their knowledge about investments. Telling them to go into a SIPP and pay more than double for funds which they know little or nothing about is pointless and expensive.

EdInvestor

dunstonh wrote: »

No they are not. Around 90% of SIPPs post A day invest in funds. The typical amc for funds is 1.5% for HL. A stakeholder on exectution only could be as low as 0.4% amc. Although 0.6-0.7% on a new one with low values. Thats half the cost of the funds in a SIPP.

A stakeholder is not comparable with a SIPP - I am talking about PPs. If you choose external funds in an insurance company PP, you can easily pay the same as in a cheap SIPP. The FSA's comments relate to "churning" where a policyholder already has a suitable comparative product (such as a PP with access to external funds) but is being moved to a SIPP to generate extra commission.This doesn't apply here.

The OP chose Halifax as a provider. That alone speaks volumes about their knowledge about investments. Telling them to go into a SIPP and pay more than double for funds which they know little or nothing about is pointless and expensive.

The OP may have originally chosen Halifax, but now he has appeared on here to ask for help because he has realised that there could be better products out there.Why would you want to consign such an investor who wishes to improve his skills to a bog-standard product?

Some people might think it's because you're concerned they will develop skills and won't need help from "advisors" any more...