Pensions - How to pick one

[andythesailor]

I am a contractor with a limited company and I plan to open up a pension.

I am aware of the reasons why so am good on that front. Just need to make the tricky choice of picking one.

Suggestions welcome.

thanks

[chopper]

I am a contractor with a limited company and I plan to open up a pension.

I am aware of the reasons why so am good on that front. Just need to make the tricky choice of picking one.

Suggestions welcome.

thanks

Media reports suggest that our beloved chancellor is going to make the concept of saving for pensions obsolete in March, so your choice will be irrelevant.

[northernladuk]

Graph going up - Buy!!!
Graph going down - Buy!!

Thanks
Dim Prawn.

[mudskipper]

Most people go for a SIPP. I'm with Hargreaves Lansdowne who do off the shelf portfolios if you want to keep it simple. Their website is great for advice and information, but they're possibly not the cheapest provider. If you're an IPSE member, they've negotiated preferential rates for members with Aegon, so might be worth checking out.

[Danglekt]

First year in a private pension pot (well, through my company) after I moved over my perm one when they realised I couldn't stay in it a while ago.

It's gone down in value.

[SimonMac]

Like MS I am with HL, I pay £200 a year and have stocks only in my SIPP, funds carry their own charge as a % of their value, where as share have a fixed price (~£16 a month) so depending on how much you are looking to hold and how involved you want to be the fees will vary.

I assume you will be paying in fro your company rather than personally? If the latter ISA's are a better choice, have a look at the Share Investment, Discussion & Tips thread over in general if you want to be disheartened with the more hands on approach where several posters (both actually and fictionally) well tell you what you should have done after an event, but as long as you think long term (10+ years) a choose a strategy with steady returns that can reinvested (dividends for shares, accumulation for funds) you can ride out any market trouble

[WordIsBond]

I've been with L&G a long time, had very good return on my funds.

Fees are important, but sometimes over-emphasised. If you make 10% a year with one provider and 2% with another, you'll do a lot better with the first even if the fees are higher.

Start by thinking about where you want to be invested. Asia, Russia, America, Europe, UK only, etc. Energy funds, finance funds, etc. Equities only, blend of equities and fixed income (bonds), bonds only, etc.

Those decisions are affected by whether you are 30 or 50, whether you have family responsibilities, whether you own a house, whether you are mortgage free, whether you have significant non-pension savings, etc, etc. Generally, the younger you are the more it makes sense to use an aggressive investment strategy (if you lose money next year, you have a long time to regain it).

Once you know what kind of investments you want, then you look at who tends to be good at those investments. Here it helps if you have industry knowledge about particular fund managers, of course. Then, you compare fees on those who are good at it. (Past performance doesn't guarantee future results, but some guys really know their stuff, and while they might have a bad year or two, over time they stand out.)

If you don't want to educate yourself on all that, maybe just get a cheap tracker fund, and count on the market as a whole going up over time. If it does and you have a tracker, you'll do fine.

[andythesailor]

Thanks for the reply. Does anyone use any wealth mgmt. companies? When I was a former permie, I simply selected the default fund which matched your age profile against the underlying assets (cash if near retirement age, and exotics if younger).

My personal stock picks have been awful at best so I would rather go with a fund set-up but just wondered if anyone has any positive experiences in going through a company who offers pensions as a service offering?

I've been with L&G a long time, had very good return on my funds.

Fees are important, but sometimes over-emphasised. If you make 10% a year with one provider and 2% with another, you'll do a lot better with the first even if the fees are higher.

Start by thinking about where you want to be invested. Asia, Russia, America, Europe, UK only, etc. Energy funds, finance funds, etc. Equities only, blend of equities and fixed income (bonds), bonds only, etc.

Those decisions are affected by whether you are 30 or 50, whether you have family responsibilities, whether you own a house, whether you are mortgage free, whether you have significant non-pension savings, etc, etc. Generally, the younger you are the more it makes sense to use an aggressive investment strategy (if you lose money next year, you have a long time to regain it).

Once you know what kind of investments you want, then you look at who tends to be good at those investments. Here it helps if you have industry knowledge about particular fund managers, of course. Then, you compare fees on those who are good at it. (Past performance doesn't guarantee future results, but some guys really know their stuff, and while they might have a bad year or two, over time they stand out.)

If you don't want to educate yourself on all that, maybe just get a cheap tracker fund, and count on the market as a whole going up over time. If it does and you have a tracker, you'll do fine.

[lukemg]

Vanguard lifestrategy - 80/20 (80% stocks, invested across globe, low fees)
Fire and forget, keep topping up, thank me in 15 years.

[WordIsBond]

Thanks for the reply. Does anyone use any wealth mgmt. companies? When I was a former permie, I simply selected the default fund which matched your age profile against the underlying assets (cash if near retirement age, and exotics if younger).

My personal stock picks have been awful at best so I would rather go with a fund set-up but just wondered if anyone has any positive experiences in going through a company who offers pensions as a service offering?

I'm keeping this to broad principles. It's clear you don't know much in this area. There are two reasons to educate yourself. The first is you are talking about a lot of money. The second would be if it is an area of personal interest to you -- you want to take the time to learn about investing or investment management.

If neither of those apply, forget it. Open a low-cost SIPP that lets you buy a cheap tracker fund. Look at these to start, but check their fees before you decide. I'd add the L&G FTSE 100 tracker as one that probably should now be on that list.

If you don't want to go with the tracker, then you have three options.
1. Educate yourself as to who is really good managing other people's money, choose one, and just trust them to choose your funds, etc. You'll pay a substantive fee, so you want someone who is good. And you won't be able to get the very best ones because you probably don't have enough to invest.
2. Educate yourself as to who the best fund managers are, and buy their funds. This is more likely to be feasible.
3. Educate yourself as to specific investments and buy them. This is a pension, you are looking for long-term results, not picking for short term profit. This is the most time-consuming and probably the most risky but potentially the most rewarding approach.