Setting up a pension after becoming self employed

[DCINightingale]

Oh wise mumsnetters, please help! I am totally out of my depth.

Last year DH quit his job to become a freelance contractor. We have set up a limited company and the work is going great. I am currently a SAHM but the idea is when the kids go to school I can start doing some of the contracting too. The money goes into a business account and we pay a set amount out into our personal joint account each month as a salary. The rest is just currently sitting in the business account.

We need to set up a pension, somewhere to invest that extra money. This is where I start to struggle. Does anyone have an idiots guide? I'd like something simple to manage, ethical, where we can pay possibly irregular amounts into (i.e not necessarily a fixed monthly amount)

I google and Google and all I get are the same articles of advice but that doesnt seem to lead me anywhere. I want to actually see some products, where do you find those? Does anyone have any recommendations for pension products? Or where we need to start?

We have had a call with someone who does pensions, but he was representing one particular pension and a "we do it all for you" service, which is great but I am aware normally the people that seek you out like that dont always offer the best deal so I'd like to do some independent research make my own mind up.

You could go to your Bank for advice or you could speak to a Financial Adviser. However Very few are truly independent. Have you looked at Which? Also Martin Lewis is the fount of all knowledge on financial matters.

Mine is with Penfold. It's really easy to set up and there are options like ethical investments only and you can also choose the risk level for your investments.

The app makes it easy to manage as well, so you can actually keep an eye on it on a regular basis and easily top up if you have extra money one month.

I am the same as the previous poster. I use Penfold too. I have a monthly direct in debit set up and then also add to it as and when I can afford it.
Before Penfold I used Nest Pensions, but I don't find them as good

OP I was just about to post the same question. I'll watch with interest. I really have no idea which one to choose, and am also unsure if a personal pension or a SIPP is better - I'd rather one I didn't have to have a lot of knowledge to administer but all the reviews seem to be for SIPPs.

Sipps are dead easy to manage.
You should both have one.
Non earners can pay in £240 a month and it gets topped up to £300 with tax relief.
If your OH will be a higher rate tax payer he gets 20% automatically then has to claim the other 20% from HMRC.
If you are under 40 then 100% equities, something like HSBC FTSE All World Index tracker is diversified globally and has very low charges.
You could go slightly ‘safer’ with something like Vanguard lifestrategy 80 or Blackrock my map at whichever level you feel is suitable or even a Target date pension like Vanguard 2045 or 2050 but with 20+ years to go until retirement I would go all in. We are mid 50’s and still have 80% in equities.
Something simple, which means all the rebalancing is done for you, well diversified and cheap.

My Sipp is with Hargreaves Lansdown, not the cheapest platform but the app functionality is good and so is the customer service.
0.45% platform charge + fund fees ( HSBC All world is 0.16% , Vanguard funds are around 0.22%.

Moneybox app. And also be sure to set up a lifetime ISA

Another vote for Hargreaves Lansdown. You can open a SIPP and choose one or more funds to invest in. It’s sounds like you’ve still got plenty of time before retirement so it should do well.

(@BorgQueen

The app is easy to manage and you can change your payments fairly easily. You can also change the fund(s) you invest in easily.

@BorgQueen As OP said she is ‘out of her depth’ I think you could explain some of the terms you’ve used?

Sorry, didn’t mean to tag twice!

I'm self employed, 50 and until today had no private pension. Just opened a SIPP with Legal and general this morning which was quite straight forward,I just had to choose which risk to go with and they do the rest.Phew,wasn't as bad as I thought and really should have done this earlier.

On this same subject, has anyone heard about Moneyfarm?

I use Penfold too, I find them very easy to use and the returns have been good. I might set up another with vanguard just so I save across different platforms.

Self employed here too. Can’t comment on other providers but I use Vanguard Target Retirement 2040 Accumulation and found it very easy to set up.

They’re useful on the phone too which is a plus for me. No queueing nonsense.

I chose Vanguard because they’re cheap and widely recommended amongst friends as well as those on the pensions forum on Money Saving Expert.

I like the way you can immediately create a report for your account/s too.

I don’t need an app, because otherwise I’d be checking it all the time! (Not good at the moment what with world events impacting the markets etc).

Good luck. Try to get your funds in before April 5th deadline so you can take advantage of the tax situation for this year!

@Possiblynotever
If it’s not too late - DH has an ISA with Moneyfarm. The returns have surpassed all our other ISAs, basically really well insulated against all the Brexit / Covid / Ukraine war shocks even with a relatively high risk.

My impression is that they’re very nimble expert investors.

Vanguard funds, definitely

Funny you should say that TigerMTV, I have just paid in a big amount of money for my DD JISA (she is turning 18 and that is my present).
I was quite impressed by their communications skills and they seem to be rebalancing a lot...which is quite unusual as they have to take into account the entrance and exits fixed fees....

@Possiblynotever

Rebalancing! I knew there was some technical term for it!

Yes. I have no funds for ISAs currently sadly, but if I did MoneyFarm would be my go-to ISA place.

You want to make sure that whatever pensions provider you choose allows you to make company contributions for directors. This is relatively rare and lots of the suggestions from PPs don't do it.

I know for a fact that Vanguard allows it, and I'm sure there are others.

Most of the previous advice is written as if you are a sole trader not a limited company.

As a LTD company, making company contributions is sensible because it reduces your corporation tax bill and you won't pay income tax on the money either. This is usually a better idea than paying into a SIPP from your earnings. It's definitely a better idea than a LISA.

You want to make sure that whatever pensions provider you choose allows you to make company contributions for directors. This is relatively rare and lots of the suggestions from PPs don't do it

It's not rare, it's normal! Hargreaves allow it, penfold does, vanguard, AJ Bell, Aviva, Fidelity. To be honest I'd like to hear the name of one that wouldn't allow employer contributions...?!

We use vanguard

I have a NEST pension that was automatically set up by one of the companies I work for. So, I'm currently just paying £50 a month to into that myself.

I already have an NHS pension. Next year when I increase my work I'll be looking at what else I can set up. This thread may well be useful.

@Weirdlynormal

You want to make sure that whatever pensions provider you choose allows you to make company contributions for directors. This is relatively rare and lots of the suggestions from PPs don't do it

It's not rare, it's normal! Hargreaves allow it, penfold does, vanguard, AJ Bell, Aviva, Fidelity. To be honest I'd like to hear the name of one that wouldn't allow employer contributions...?!

Most of the low cost workplace pension provider don't let Ltd Company Directors make company contributions.

They'll let you set up as an employer for AE purposes. But not do company only contributions.

They also let you set up as a sole trader, but won't do company conts.

NEST (who've been mentioned a billion times upthread) - don't.
Aviva - only through their expensive executive director plan. Not through their options commonly marketed at self-employed
Peoples Pension - nope
Scottish Widows - nope
Legal and General - nope

And so on.

Most of the expensive private SIPPs do. HL being a good example although there's a special form to fill in and they suggest advice.

Vanguard is one of the few that offer a cheap plan with default investment strategy, that also allows company contributions. It is a SIPP but with charges more in line with workplace schemes.

Annoyingly, they won't let you do a monthly DD from the business, you have to do a transaction each month. But still at least it's an option.

I was just trying to sort this today. Been paying our pensions out of our personal accounts after paying ourselves our salaries. We are a limited company me & DP. I called my pensions provider and they said it was fine to change the Dd to come from my business account.
DP needs to set something up as has lots of small pots to transfer, but none will that will do it. He is being asked for a min investment to set up a pension say £500. We just don't have this spare. It's hard when you are really financially unknowing.

@OnceUponAThread I wonder if my pension supplier didn't really understand what I was asking when they said it was fine to change. I was hoping to put it as a business expense so corp tax by contributing to the pension from the business.

Our accountant has mentioned it was complex, but she is more of a book keeper and isn't very knowledgable on certain things. We had a proper big company doing our accountants before and I regret changing to save some money.

I love penfold, it is just so easy. Total control. I regularly send extra bits and bobs of cash over to it, as well as my regular contributions because it is just so easy to do on my phone.