Anybody know about pensions?

[Totallycluelessoverhere]

After months of thinking about opening a pension investment I am going to do it this week.
I’ve been a carer for 15 years and not been able to afford to invest anything but I am now in a position where I have cleared my debts and can afford to start off with small monthly payments into a pension fund.
I am not in paid employment so no option for a wok based pension (hoping this will change in a few years).
I am clueless about investing and don’t feel confident enough to choose how to buy and sell and trade in a SIPP. I’m almost certain I’m going to just choose a pension where I choose a level of risk and let the investment team get on with investing on my behalf. I know this is slightly more expensive in fees and charges but I really don’t think I can manage it myself.
Is there a better manageable option?
Is this a terrible plan?
I will be investing £2000 upfront and then £150 monthly. I hope to increase my monthly payments in a few years when my mortgage will be paid off.

Hi Op I work in finance and specifically pensions and investments

Your right not to go for a SIPL if you have no knowledge or understanding of the pensions or investments markets. I have seen people loose all their money through ill advised investments and to be honest its their own doing as they just dont have the background.

First and foremost instruct a financial adviser. Yes you pay them a fee...but a good one will make return on yohr investments. Fees vary so shop around. Do get professional financial advice.

Obviously most FAs dont charge this amount but to give an example of their worth...a client recently opened a pensions stocks and shares trading account 2 years ago has made over 100k in that time. But paid the FA 4k for their advice and for them to be managing the deals etc.

You can always put into a pension scheme such as scottish widows/prudebtial etc but depending how long till you retire you may not have enough time to build that to a healthy pot

Again best idea is seek financial advise from an advisor who will be able to taylor your requirements and look to get you the best return on your investments

*SIPP

So not bother paying a financial advisor for that amount op. Just open a private pension with the lowest fees you can find. Most let you choose funds or investment strategies if you should want. The main advantage will be tax. Maybe look on mse for recommendations.

Thanks Bonnie, that’s really helpful and please to know I’m not wrong to not want a SIPP. I have 25 years to build a fund, so not a great length of time. I’m basically just wanting a tax efficient way of saving for old age.
I have looked for a financial adviser and most of the ones I came up with would only advise on investments that had a minimum £50k lump sum to invest.
I’m not expecting to have a huge pension pot when I retire but am really hoping that if I increase my investments in a few years when my mortgage is paid off that I will have monthly return of around £300 when I retire to top up my state pension (my NI contributions are as complete as it’s possible for them to be and I have no gaps in my record). Really wish I had opened a pension sooner but unexpected caring commitments and debt made it impossible.

Thanks cayrol , I will have a look at MSE. I’m going to spend today looking around and then hopefully choose something by Monday. I really need to stop putting it off.

I'm not recommending it (I don't have any expertise or other pensions to compare with) but I have one with People's Pension and it is online, transparent and easy to monitor. I am sure there are lots of similar products, but checking their website for info could be a good start.

If you are under 40, the government's lifetime ISA pays 25% to match your savings up to £1000 per year. You get this until you are 50
So £10-11,000 free money if you start one at 39, along with any interest accrued. You can withdraw at 60. Withdrawal before incurs a penalty.

I have looked into the ISA dianaT1969. My concern was that we currently get tax credits and will be moved to universal credit in the future and will need to use the savings for living costs as universal credit will included them in the calculations. Of course it is right that people should have to use accessible savings to support themselves but that will leave me with no money to support myself in old age. I would rather lock it away so I can’t be tempted to dip into the middle eu when things get right.

^dip into the money

Look for a financial adviser does lifestyle financial planning. They will help you work out what your life plan is and then formulate a financial plan to underpin that, which would include looking at how a pension will fit in to support income in retirement. They won't require you to have a minimum amount available to invest.

If you want to go it alone then you could look at a provider like Royal London for a personal pension. They have a range of readymade investments options which are well-priced and will do the job.

I would suggest that very few IFA's would pick up that business, sadly, the price of advice has gonet through the roof. So what they would charge you, would be a large portion of what you have to invest.

I think that peoples misconcetion of SIPP's is coming through here, they are not specifically for high risk shares, and losing all of your money is only a possibilty if you enter the AIM market, or single company shares.

You can set up a SIPP and then use a popular portfolio provider such as Vanguard. This will spread your risk, and for you to lose all your money, the majority of the FTSE would have to be zeroed in value.

I use Hargreaves Lansdown as my online SIPP. Fees not the cheapest but their website and functionality is good.

Personally with 25 years to go until you want the money, I would take more risk as time is a great risk reducer. Diversification is key too. Many eggs in many baskets is usually a good risk spreader.

If you want low cost funds then a tracker may fine for you.

The Legal and General Global Equity Index fund is a tracker giving exposure to 2500 companies in the world, is low cost and has performed well.

That would be a more adventurous fund by the way but the 25 yr term would reduce the risks as would paying in monthly.

No need to pay an IFA - educate yourself on moneysavingexpert.com and the like.

IFAs play on fear, be ready for their sharp intake of breath when you say you manage your own investments. No one will ever look after your money better than you do :)

Whatever you do, ensure you check the Financial Conduct Authoritys register; they regulate IFAs.

Hi Original Poster! I would like to know how you got on with this. Do you have any knowledge to share and have a moment I would be grateful. I am fairly intimidated by finding a FA which sounds like a research task in itself. I am in a similar position to yours. thank you

IFAs play on fear what utter bollocks

A SIPP is a structure, not a product.

Go on vanguard 60/40 Lifestrategy fund. Sorted

Post in the Pensions section of MSE- lots of Financial advisors on there. Don't pay an advisor as their fees will eat up your investment.

OP, if you are moved into universal credit and have one month where you earn more than £604 (from memory), then in that month you can set up a Help to Save thru UC. Basically you commit to putting in at least £1 per month to a max of £50 per month (you can vary it every month) and whatever the max you have saved in the first 2 years, the gov will pay you half again. So max you could save would be £1200 in 2 years and gov would give you £600. Then same again over the next two years savings.so you could get £1200 free if you never took it out till the end of year 4. You only need to be on UC and earn the £604 in the month you join. Seems a quick way to get some free money to me. You can draw your own money out at any point, and you get the 50%extra on the max you have had in over that period.

I will be investing £2000 upfront and then £150 monthly.

If you don't have earned income you can't put this much into a pension, you are capped at £2,880 per tax year. This is made up by govt tax relief to £3,600.

You could put the rest into an ISA.