Pension advice fir dummies.
Discussion
Owing to previous bad experience and friends and family experience, I do not have a pension, I have just left a job that provided a company pension, they have informed me that after 7 months employment I have 1790 pounds in their pension.
I cannot have this cash which would have gone toward a couple of weeks in Lake Garda , I have to pit this money into another pension.
Now I wasn't interested in starting a pension but it seems a shame to waste the money.
What are my options, as I now work for a small one man band type company I don't want to go the company pension route, I also have a habit of frequently changing employers, so it would be some sort of personal pension, what is out there? What should I look for? And please keep it simple as I am just a simple person of the clay, you know, thick.
Thanks for your replies.
I cannot have this cash which would have gone toward a couple of weeks in Lake Garda , I have to pit this money into another pension.
Now I wasn't interested in starting a pension but it seems a shame to waste the money.
What are my options, as I now work for a small one man band type company I don't want to go the company pension route, I also have a habit of frequently changing employers, so it would be some sort of personal pension, what is out there? What should I look for? And please keep it simple as I am just a simple person of the clay, you know, thick.
Thanks for your replies.
Mike,
Until you grow a decent fund, keep it simple and keep it cheap. Paying over the odds at outset for sophistication that you don't need is like treading water with weight around your ankles. Look for a simple personal pension that will allow you to invest in cheaper tracker style funds that can be blended to match your attitude and capacity for risk with your capacity for loss.
For most people in their 20s, this means having a basket of higher 'risk' funds. If you're starting out later in life, that won't always apply.. but it might! Take advice on the suitability of avoiding expensive pension funds at this stage and SIPP.
Off the top of my head, the Aviva personal pension is quite cheap, but don't be afraid to also phone up the likes too, of Pru, Aegon, Standard Life etc and ask them for an illustration over the phone. Keep the criteria the same for all requests and they'll tell you what you should have left, after 'x' years assuming the growth rate is the same.
Don't get obsessed with sexy functionality - it's pointless sales rubbish - instead, at this stage, obsess with keeping the costs low. Cheapest isn't always best, but starting a pension is like starting a business - keep the overhead down.
Until you grow a decent fund, keep it simple and keep it cheap. Paying over the odds at outset for sophistication that you don't need is like treading water with weight around your ankles. Look for a simple personal pension that will allow you to invest in cheaper tracker style funds that can be blended to match your attitude and capacity for risk with your capacity for loss.
For most people in their 20s, this means having a basket of higher 'risk' funds. If you're starting out later in life, that won't always apply.. but it might! Take advice on the suitability of avoiding expensive pension funds at this stage and SIPP.
Off the top of my head, the Aviva personal pension is quite cheap, but don't be afraid to also phone up the likes too, of Pru, Aegon, Standard Life etc and ask them for an illustration over the phone. Keep the criteria the same for all requests and they'll tell you what you should have left, after 'x' years assuming the growth rate is the same.
Don't get obsessed with sexy functionality - it's pointless sales rubbish - instead, at this stage, obsess with keeping the costs low. Cheapest isn't always best, but starting a pension is like starting a business - keep the overhead down.
Are you employed by these people or are you self-employed and contracting to them, as my film industry clients tend to do? As every employer will eventually be compelled to pay in to a pension as part of your package (unless you opt out and give up free money) you could end up a with a tedious number of these.
If self-employed, no such problem. If you don't intend to make more contributions stick it in a punty fund in a cheap scheme and let it rock until you hit 60, then take it as a lump sum Triviality payment, 25% tax free, 75% taxed.
If I may be indulged in a short Pensions plug, most people who dislike pensions actually mean they dislike the investment performance or how expensive it was to run. A Pension is essentially a tax treatment that gives you an immediate uplift (tax relief) on your investment. What's wrong with that??
Sure if it is invested badly or expensively, which is much easier to police these days, it won't be much good, but that's not because it's a pension. Look past the label.
I occasionally get a new client with a small fund at age 50 or so moaning about how rubbish their pension is and what a bleak retirement they are looking at, they should have bought more property etc. The simple answer is £50 a month wouldn't have bought much property either, put bu66er all in and you'll get similar out.
Hmm, the view from my high horse is getting murky, I'd better climb down!!
Edited for Saturday brain fade
If self-employed, no such problem. If you don't intend to make more contributions stick it in a punty fund in a cheap scheme and let it rock until you hit 60, then take it as a lump sum Triviality payment, 25% tax free, 75% taxed.
If I may be indulged in a short Pensions plug, most people who dislike pensions actually mean they dislike the investment performance or how expensive it was to run. A Pension is essentially a tax treatment that gives you an immediate uplift (tax relief) on your investment. What's wrong with that??
Sure if it is invested badly or expensively, which is much easier to police these days, it won't be much good, but that's not because it's a pension. Look past the label.
I occasionally get a new client with a small fund at age 50 or so moaning about how rubbish their pension is and what a bleak retirement they are looking at, they should have bought more property etc. The simple answer is £50 a month wouldn't have bought much property either, put bu66er all in and you'll get similar out.
Hmm, the view from my high horse is getting murky, I'd better climb down!!
Edited for Saturday brain fade
Edited by pacoryan on Saturday 11th January 14:28
Might be worth asking them why you can't take it as cash, given that less than 2K:
http://www.hmrc.gov.uk/pensionschemes/small-pen.ht...
http://www.hmrc.gov.uk/pensionschemes/small-pen.ht...
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