Pension advice

[jmo21]

Am in the process of deciding what to do about my pension.

I have a decent amount built up from various permy pensions, and want to start adding to the pot again from my Ltd company

I've read a bunch of stuff over on another site (http://www.contractoruk.com/money/co...ns_advice.html) that make paying a lot into the pension sound like a no brainer.

I won't be a high rate tax payer this year (first year of contracting).

Looking for more ideas of what most people do, as opposed to just what the websites say.

thanks in advance!

[pmeswani]

Am in the process of deciding what to do about my pension.

I have a decent amount built up from various permy pensions, and want to start adding to the pot again from my Ltd company

I've read a bunch of stuff over on another site (http://www.contractoruk.com/money/co...ns_advice.html) that make paying a lot into the pension sound like a no brainer.

I won't be a high rate tax payer this year (first year of contracting).

Looking for more ideas of what most people do, as opposed to just what the websites say.

thanks in advance!

I've gone down the route of a SIPP. I don't have a property, so can afford to invest some of my money into a SIPP.

With a SIPP, you are in control with what investments are assigned to your pension (and you can change it regularly if the current investment is not performing). If you don't have the time, understanding of investments, etc. it would be best to go for a Stakeholder pension. With SIPP and Stakeholder Pension, you can contribute via Employer and Employee contributions. SIPPs has the added advantage that you can make contributions from your own personal bank account as well. Both forms of pension types offer Tax releif (i.e. if you want to contribute £100 a month, and are on a lower rate... £80 comes out of our payroll / bank account and £20 comes from the Inland Revenue rebate).

With my SIPP, I have transferred one of my previous pensions into the SIPP and am in the process of transferring my Protected Rights Pension into the SIPP (new rules effective from October before anyone shoots me down!) which works out to be in between 10k and 12k of previous contributions (including employer contributions) which has no transfer fees. I'm putting my eggs into one basket for simplicity and flexibility. Also, I can invest in shares (not a good time right now) and have them in my SIPP. This is for long term investments rather than short term gains. No other pensions, as far as I know, offer the option of assigning shares to a SIPP.

Stakeholder pensions requires a lot of faith that the providers know which funds are the right ones for you. I personally don't have a problem with them, but chose not to use them because of the inflexibility of choice and a possible vested interest they may have in the fund choices. Stakeholder Pensions offer cheaper management fees, so may appear to offer value for money.

At the end of the day, you need to decide if you have time to manage your own pension or whether you are happy for someone else to do it. But in general, if you don't have a mortgage (whether you own your own house or not) and are looking for a form of income at retirement, you should invest into a pension and contribute as much as you can pratically afford.

PS I don't know if you can contribute to your former pension funds. You may need to check.. however it may be wise to shop around and invest in a new pension and, after speaking to an IFA, merge all your previous pensions together.

HTH.

[jmo21]

thanks for the advice pmeswani!

[glashIFA@Paramount]

Am in the process of deciding what to do about my pension.

I have a decent amount built up from various permy pensions, and want to start adding to the pot again from my Ltd company

I've read a bunch of stuff over on another site (http://www.contractoruk.com/money/co...ns_advice.html) that make paying a lot into the pension sound like a no brainer.

I won't be a high rate tax payer this year (first year of contracting).

Looking for more ideas of what most people do, as opposed to just what the websites say.

thanks in advance!

You can pay an employer contribution and save on Corporation tax as the contribution comes off the top line (employer contribs are paid gross) or you can make an employee contrib and pay net of basic rate tax. Plenty of threads discussing the "merits" of both options.

You can set up a new plan and pay into it and leave your old plans in place or transfer them into the new plan. You can resume contribs to the old plans. Hard to say which is best without knowledge of the old plans but bear in mind that pensions, like most other things, change over time. Some old plans that i've seen have high charging structures so not a good idea resuming contribs there. Newer polices are more friendly when it comes to charges (stakeholder legislation forced the non stakeholder plans to fall into line with charges). As pmeswani says, SIPPs and stakeholders are out there for you but you can add personal pensions into this for the reason i just mentioned. a stakeholder pension is just a personal pension with a gov't imposed cap on charges but the trade off is that they only offer a limited number of funds. a personal pension can be just as cheap but with more investment flexibility. And of course, with a SIPP, the clues in the title. Self Invested, so you get to decide where your contribs go. SIPPs also allow for a much wider spread of investments, commercial property, shares etc.
One other thing with regard to the old arrangements. You might want to check if there's a penalty for transferring them to a new arrangement, depends on funds that they're invested in and how long you've had them. Also worth checking on the death benefits pre retirement. Some old funds will only return contribs on death as opposed to fund value so a good reason to look at a newer contract if death benefits are important to you. Any old protected rights can be transferred into a personal pension/stakeholder and again, as pmeswani says, this should be possible with a SIPP after October. However, if you decide to go down the SIPP route make sure the provider will be allowing protected rights to go in after Oct. Just because the rules are going to allow it i can assure you that not all SIPP providers will change their rules to accept them!

[pmeswani]

Any old protected rights can be transferred into a personal pension/stakeholder and again, as pmeswani says, this should be possible with a SIPP after October. However, if you decide to go down the SIPP route make sure the provider will be allowing protected rights to go in after Oct. Just because the rules are going to allow it i can assure you that not all SIPP providers will change their rules to accept them!

For info only, Hargreaves Lansdown (www.h-l.co.uk) will allow transfer of protected rights pensions. The only reason I know this is because I am going through transferring my protected rights pension into the SIPP which they provide me. Am not necessarily saying they are the best, as I have not done any fishing / research when I chose my SIPP. My dad recommended the company to me and took his word for it. As always, seek advice of an IFA, search around the interweb to compare and make your own choices. My personal (unqualified) recommendation is go for a SIPP and enjoy the flexibility.

[GreenerGrass]

Another vote here for bunging any previous "defined contribution" pension pots into a SIPP with H-L, including the protected rights stuff.

Echoing what's been said above, I can't begin to describe how terrible and limited my previous stakeholder pension was compared to H-L's SIPP.

I have been slacking on new contributions so will probably set up a regular payment from the company account.