Pension options for a contractor - Pension release?

ajinperth

I am an IT contractor with my own limited company and plan to pay some £8-12k into pension this year. The pension will come direct from my company as this is the most efficient way otherwise I lose out big time on National Insurance payments.

I am investigating my options. The simplest for me is to top up my existing stakeholder pension by means of a direct payment the provider.

Are their better options? - for instance if I set up a new pension online will I pay lower fees?

Are there advantages in paying more now and taking advantages of up to 25% pension release tax free next year and wait another 10-13 years or so before drawing a pension based on the balance

I do not have time to be an active investor so a SIPP might be a poor choice

Thank you in advance to those who make useful suggestions

EdInvestor

ajinperth wrote: »

Are their better options? - for instance if I set up a new pension online will I pay lower fees?

Do you mean a SIPP?

Are there advantages in paying more now and taking advantages of up to 25% pension release tax free next year and wait another 10-13 years or so before drawing a pension based on the balance

If you did this, which involves putting your pension into income drawdown, you would likely need to transfer to a SIPP anyway as you can't usually do income drawdon from a stakeholder..

shaunrc

Hi ajin

Firstly I am an IFA and being a regulated person cannot give formal advice with undertaking a formal review.......

I deal a lot with ltd. companies and you are definitely in the right area in terms of paying directly from the company as it is very tax and NI efficient.

However you also state that you do not have time for active investment. My suggestion would be to find yourself an IFA who specialises in this area so that you can get advice in 3 areas

1. Tax efficient ways of getting financial benefits from a company.This includes pensions but also includes life cover,critical illness cover,income protection and private medical insurance.

2.Review your investment strategy and set one for going forwards.

3. Take advice on what plan to use as personal pensions have considerably improved. Some can be cheaper than a stakeholder and others can be treated virtually as a SIPP in terms of having a wide fund choice so there are quite a few choices. It may well be worth switching your current pension fund at the same time.


All in all you are likely to get advice combined with a low cost plan if you find yourself a good adviser.

Good Luck!