Opening a stakeholder pension as a SAHM. Help!

[VLC]

Information on pensions for non-earning SAHMs is pretty scarce. I can't find a comparison site that allows me to filter out the MANY pension products that are just not relevant to me. I've contacted the pensions advisory service, and the money advice service. There's lots of sites out there for pension products for people earning a salary but they're all irrelevant to me. I've gauged that as a SAHM I probably need a stakeholder pension because I'll be limited in the amount I can contribute, as a non-earner.

My state pension credits are taken care of through NI Child Benefit credits. So I'm now looking to find an additional, modest personal pension to top up the state pension.

But if you are currently a SAHM wanting to set aside a modest amount into a private pension fund then its much harder than I thought to find which products and providers are even available, let alone begin to compare them. And the idea of paying for a financial adviser is a non-starter. It's not really advice needed anyway, so much as a way to review the various relevant products that are already out there without having to plough through and eliminate eleventy billion products designed for the salaried workers.

So if you are a SAHM - not salaried - and have successfully managed to set up a stakeholder pension for yourself, can you talk to me about it please?

Why a stakeholder pension rather than a SIPP?

What stakeholder pensions are you looking at, what sort of fees are involved?

You can pay in up to £2880 to a pension without having earned income and get tax relief added to that making it £3600 in total going in to the pension (the pension provider automatically claims the tax relief and adds it in around 6-8 weeks).
www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-tax-relief-eligibility

A podcast/video about pensions and ISAs which might be useful.
meaningfulmoney.tv/2020/11/25/the-ultimate-guide-to-platforms-pensions-isas/

Do you have any idea of where you would like to invest your pension contributions? As that can have a bearing on the provider you choose.

Something like the Vanguard SIPP has relatively low fees, but you can only invest in Vanguard funds.
Something like a Stakeholder can have a more limited range of funds than a SIPP.

Pensions which offer lifestyling funds can be a good option if you’re not comfortable picking investments, as these automatically reduce your exposure to risk as you approach your retirement date. (The default funds for the government endorsed Nest workplace pensions work in this way)

nannynick I'm not wedded to the idea of a stakeholder particularly, I was led to understand it was the best pension option for non-earners due to the capped fees and ability to contribute small amounts. If other pension products can provide these features they would also fit the bill. I'll watch that video, thanks!
I've just spent some time talking to Standard Life about both their stakeholder and AMPP schemes and now have some info to digest there. It's a start. I'd like to get an idea about other providers and what they offer too.

BeastOf BODMAS Do you have any idea of where you would like to invest your pension contributions?
No, none . Perhaps this will change if I get any hands on experience of making such decisions.

I bet I'm not alone in feeling embarrassment at being somewhat pension/investment illiterate. Exacerbated by being a SAHM for many years, I no longer feel in control of finances at all. When I worked I contributed to the pension schemes of my employers. But those are frozen now. I'm taking my first steps into taking back control of my future. Which is not easy without my own income, but hopefully that is something I can change.

Thank you both for your responses.

I had one with standard life and it did pretty well. I've since moved it to a SIPP as I managed to move my old, poorly performing work pension too. Now I've got them both with a an investment manager in a SIPP where I choose the risk level I'm comfortable with and let them choose the appropriate funds.

SIPPs have changed over recent years and can now be very low cost and may accept small amounts, though some like Vanguard do like having a £500 starting amount (or £100 per month) but always worth having a chat with providers as they sometimes compromise on their published minimums. You could always save up a while to meet the minimum, then open with the minimum amount, then add to it as and when after that.

Vanguard SIPP with target date fund, 0.15% platform fee, 0.24% fund fee... so 0.39% in total. So I don't think you need the capped fee of a Stakeholder Pension (1.5% per year for the first ten years of scheme membership and then not more than 1% thereafter).

Have you got a Stocks & Shares ISA? You could start with that, it does not have the tax relief being added but it does not lock away the money, so you can move money back out whenever you like.

I'll look into Vanguard, that sounds interesting. I don't have an ISA (and I'm too old for a LISA). Part of what I'm after though IS to lock funds away in a pension so they can't be accessed. Stage 2 will involve looking into moving the frozen pensions (or not). I haven't really got a feel for how they're performing. One is pretty small potatoes. The other I remember looking at a decade ago and being horrified that the size of the pot seemed so small considering the contributions. It scared me into putting my head in the sand for a long time.

But I want to crack on with a scheme I can contribute to now. The fact that the contributions will be small will allow me to get a feel for things without the potential for huge screwups. I'm a complete novice and the whole pensions and investments shebang is opaque, turgid and terrifying from where I'm standing.

That's really interesting Vargas. I feel like I may end up with several eggs in different baskets and would like to get to the point where I would feel confident enough to move funds to where they'll do better.

Whilst wrapping my head around my old existing frozen pensions, I've discovered that my old work pension has been invested in the wrong fund for over 20 years!

I have a letter in my files from my employer dated 2003 apologising to me that my funds had been mistakenly invested in the "BGI Aquila Life UK Equity Index Fund" when they should have been in the default Global Equity Fund. The letter states that they were going to rectify the mistake but I've just realised now that this correction never happened. Each time the fund changed management (eg company takeovers etc) the mistake was grandfathered again. And now it seems my pension has been invested 100% in UK Equities from 1999 till now. (I left the company over a decade ago and it's been deferred since).

Is this error likely to have cost me money in my pension fund? Or could it have been beneficial? How can I find out which?

@VLC
That’s a pretty big error! I would contact the current pension provider, provide a copy of your evidence and ask them to carry out a full loss assessment to find out whether you have been disadvantaged. If you don’t get a quick response, you could ask for it to be registered as a formal complaint which will give you chance to refer it to the ombudsman if you don’t get a satisfactory answer.

Don’t worry about the pension changing hands a few times, when a provider buys up a ‘book’ of pensions they are buying the liability for sorting out possible mistakes as well as the profit!
In the first instance you could punch both funds into a site like Trustnet and compare the performance, (performance tools>multi plot charting)

In terms of your conversations with Standard Life, why not ask the same questions of other big name mainstream providers like Royal London, Aegon and Aviva to start you off?
What you will want to look for from each pension is the Key Features Document (KFD). Pensions and investments all have to publish them and they will contain the same information which should make it straightforward to compare like-for-like.

A similar type of document exists for investment funds, called Key Investment Information Documents (KIID), to allow direct comparison.

These can all be googled!

@BeastOfBODMAS thanks for this advice, so helpful. My one reservation is that if I have been advantaged by the error, will I be at risk of my pension provider subsequently reducing my pension fund? I can't risk letting that happen!

I'm off to look at Trustnet.

I don’t think so but I don’t know for 100% certain. I think they would just give you the option to switch the fund to the ‘correct’ one now, if still available, or it’s current equivalent.

You could ring them and ask in the hypothetical what would happen, before giving over your account number

I opened a vanguard pension. got my old pension from when I worked transferred into it. Chose funds and now pay in whatever we can spare each month up to the £2880 a year.