Pension advice

[newbieITContractor2015]

Hi,
I'm looking at starting a pension via my limited company as I can afford to do it at the moment, to save for the future and to reduce my tax burden. I'm currently looking at a managed pension service which takes a 1.5% - 2% annual cut vs using a non managed fund such as a FTSE 250 tracker which has around a 1% fee. What I'm after is something whereby I can vary the amount I pay in on a quarterly basis to reflect my circumstances as I'm contracting via my own Ltd company and therefore I don't have the guarantees you get with permanent work.

Any recommendations or alternatives worth exploring?

Thanks

[stek]

Spunk the money on a Tesla.

[Fred Bloggs]

Hi,
I'm looking at starting a pension via my limited company as I can afford to do it at the moment, to save for the future and to reduce my tax burden. I'm currently looking at a managed pension service which takes a 1.5% - 2% annual cut vs using a non managed fund such as a FTSE 250 tracker which has around a 1% fee. What I'm after is something whereby I can vary the amount I pay in on a quarterly basis to reflect my circumstances as I'm contracting via my own Ltd company and therefore I don't have the guarantees you get with permanent work.

Any recommendations or alternatives worth exploring?

Thanks

Lots of posts here on that topic. Some by myself. Do a bit of reading here at CUK, download the free guides from Hargreaves Lansdown, then come back and ask again in more specifics. HTH.

[northernladuk]

Check the Welcome/FAQ section. There is a thread in how to search the forums. There have been endless discussion about pensions and other options. Have a read through them and the. As Fred says come back with something a little more specific.

[IR35 Avoider]

You can open a SIPP account and make employer "single contributions" of whatever amount you decide is appropriate. I used to make such contributions quarterly, but you can make them as often or as infrequently as you like. You don't have to (and as a contractor probably shouldn't) sign up to making any sort of regular payment.

Pay a 2% fee means that at best a third of your real investment returns will go into some else's pocket instead of your own. It's likely to be more than that, if they choose anything but the riskiest/highest returning assets for you, which they almost certainly will.

Similarly, 1% is an insane amount to pay for a FTSE 250 tracker. To put that in context, Vanguard UK offer a FTSE 250 tracker ETF for 0.1%. Have a look at Vanguards funds to get an idea of what reasonable charges look like.

https://www.vanguard.co.uk/uk/portal...s/all-products

I have a couple of "expensive" funds. I regard 0.3% as expensive. I generally wouldn't consider paying more than that on any long-term investment.

[chopper]

Open a SIPP with HL or III (other providers are available. HL cheapest for low value pots, III cheaper for higher value pots)
Send irregular payments to them by cheque along with some "company contribution" paperwork
Split the contributions into a Fundsmith Equity and Vanguard Lifestrategy 80% fund.

It is that easy. A damn sight cheaper than the tulipe your IFA is recommending, and probably better gains.

(Disclaimer: I'm not an IFA. Funds go down as well as up. This is a suggestion, not a recommendation. Do your own research before committing your money.)

[gables]

You can open a SIPP account and make employer "single contributions" of whatever amount you decide is appropriate. I used to make such contributions quarterly, but you can make them as often or as infrequently as you like. You don't have to (and as a contractor probably shouldn't) sign up to making any sort of regular payment.

Pay a 2% fee means that at best a third of your real investment returns will go into some else's pocket instead of your own. It's likely to be more than that, if they choose anything but the riskiest/highest returning assets for you, which they almost certainly will.

Similarly, 1% is an insane amount to pay for a FTSE 250 tracker. To put that in context, Vanguard UK offer a FTSE 250 tracker ETF for 0.1%. Have a look at Vanguards funds to get an idea of what reasonable charges look like.

https://www.vanguard.co.uk/uk/portal...s/all-products

I have a couple of "expensive" funds. I regard 0.3% as expensive. I generally wouldn't consider paying more than that on any long-term investment.

What's the reason for not making a regular payment? I'd prefer to have say minimum go out every month with an irregular 'top up' when funds allow.

[northernladuk]

What's the reason for not making a regular payment? I'd prefer to have say minimum go out every month with an irregular 'top up' when funds allow.

IR35 Avoider

I stopped reading at this point...

[eek]

What's the reason for not making a regular payment? I'd prefer to have say minimum go out every month with an irregular 'top up' when funds allow.

From memory (albeit going back 20 years) one off payments cost less in commission and other costs than regular monthly payments. Also as a contractor its probably best to contribute when you know you can afford to rather than otherwise.

[kaiser78]

I have read in a couple of reputable publications that the rule of thumb for investing is if your total investment pot is < £100k then SIPPS or self funding vehicles are sufficient. However if > £100k then professional advice should be sort through a reliable IFA.