pesinson confussion

dazere05

hi

i am 20 an earn about min wage,
can any one help i wont to start up a pension but i am confussed about which on i should go for.


thanks


Daz

dunstonh

Does your employer offer a pension?
Do you have sufficient money for an emergency fund?

From 2012 all employers will be forced to offer a pension that they pay into (either arranged themselves, which is the better option, or via the Govt scheme). If you are a bit short on the emergency fund then it may well be better to save to build that up and then in 2012 when the rules change and your employer has a scheme running you can join that one.

scrivette

If your employer offers a pension scheme then it will be worth seeing what benefits they offer.

Otherwise a Stakeholder Pension may be an option for you as that is aimed for people on a pay of under £30,000.

dunstonh

Otherwise a Stakeholder Pension may be an option for you as that is aimed for people on a pay of under £30,000.

Thats a misconception that came about because the pension rules changed at the same time stakeholders were introduced that allowed those in occ schemes an earning under £30k a year to pay into a stakeholder (and personal pension and SIPP). That rule has since gone.

In reality, the stakeholder is the simple product for inexperienced investors and those that wont take an interest in the investments. There is less to go wrong by making bad decisions in a stakeholder compared to a modern personal pension and SIPP. Stakeholders were for a while the cheapest option but nowadays modern personal pensions on offer can be cheaper than stakeholders.

The stakeholder is effectively a dead product that is being shored up by FSA rule RU64. If RU64 was abolished then you would see providers remove their stakeholder option.

I dont see the stakeholder being classed as a failure though. It did bring the charges down on pension plans. So, that is certainly something it can claim as a success. However, it also brought the remuneration down. Not because of lower charges but because the way they are charged wasnt suited to giving finanancial advice. This meant that it wasnt profitable to sell stakeholders in general for the salesforces (IFAs dont have a problem due to lower overheads and liability issues). So, most of the salesforces closed down. This was a big problem for retirement planning as like it or not, pensions did in general have to be sold to people and contributions encouraged to increase. You cut out the salesforces and you havent got anyone doing that and a good many people will not bother doing anything. So, in respect of retirement planning and encouraging people to pay more, it was a failure.

wiseradvisor

dazere05 wrote: »

hi

i am 20 an earn about min wage,
can any one help i wont to start up a pension but i am confussed about which on i should go for.


thanks


Daz

If the employer has pension plan, then you don't have to worry.

If not, there are many pension schemes available that you can go for.

dunstonh

wiseradvisor wrote: »

If the employer has pension plan, then you don't have to worry.

If not, there are many pension schemes available that you can go for.

If the employer doesnt pay into it then its pointless.

BTW, you spelt adviser wrong and there are no links allowed in sigs