Help me set up a pension

[Scared0112]

I don’t have one. Been self employed ten years and never got any good advice. I’m early 30s, hoping it’s not too late for me.

I guess the best place to start is now right? But where? I think I could afford to put £220 pm in right now maybe. I realise this will probably get me nowhere.

how do I know where or how to start one?

I’ve got a pension with Nest, it’s very simple to set up.

Go on vanguard and pick one of their ready made pensions

Could someone explain the difference between standard savings account and a pension scheme to me like I’m 5?

Government add 20% to the contributions you pay into a pension SIPP (I’ve got a vanguard SIPP) BUT i can’t access until 57 years old without loosing that contribution (and I pay tax on my pension as I start to draw it, although 25% is tax free)

I also have a TRADING 212 Stocks and Shares isa which is tax free gains and I can access at anytime but no government contribution and max contribution 20k per annum

Maybe hedge your bets and try both!

SIPP you pay in £80, shortly after it’s topped up to £100 by government

Mia McGrath on Ticktok is good to follow for sound financial advice coming from a young person and explained clearly, she inspired me to get the stocks and shares isa

Thank you.

conversing with ChatGPT it’s recommending AJ Bell over vanguard.

I’ll go look at Mia on TikTok also.

TBF I didn’t do tonnes of research on Vanguard just wanted to get on and get one, ChatGPT is a great resource!

100% recommend Trading212 app though it’s great!

I downloaded Freetrade app some time ago and invested a measly £25 in elilily to try and get an understanding- that was about two years ago and from what I can tell it’s all been a downward trend lol

vanguard might be a fraction cheaper but both vanguard and AJ Bell will offer you guided investment solutions which is likely better than you picking stuff at random yourself. Additionally, if you earn enough to pay higher rate tax then you can currently obtain higher rate tax relief making a pension contribution very worthwhile. You are not too late to start saving but don’t keep deferring. And the core difference between ISA and Pension is pension is locked up until 57 at earliest but you get tax relief which boosts the amount paid in - eg if you pay £220 that will be increased to £275 with the tax relief and if you are higher rate tax payer then you’ll also get a tax rebate if you claim it via tax return.

ISA is accessible any time (a good thing and a bad thing) but you don’t get tax relief and any withdrawals are tax free.

Paying to both is a good idea but I’d put more into pension once you have enough in cash savings for anything unexpected.

Thank you!

chat tells me AJ is best for me under 32k contributions because vanguard won’t accept direct debits from my Ltd co so I’d need to do it manually each month so I’ve just set one up.

no more procrastinating! Thank you

Even better if contributions coming straight from Ltd Co to pension. So chat about personal tax relief is irrelevant and technically you are not self employed, you are an employee/director which is a crucial difference when it comes to how you describe yourself for pension matters for contributions. (Lots of people don’t make the distinction) And you can’t fund an ISA from ltd co either. But funding a pension from ltd co is a great way to get money out of your business for your future self, saving NIC and maybe even reducing corporation tax.

Ok so pension from LTD and for personal ISA or investing in stocks and shares (I know nothing)

yes you’re right, sorry I should have been clearer in my wording. Accounting did flag that I should be considering this for tax purposes if nothing else a couple years ago but honestly the years kept rolling by and the whole setting up a business a decade ago was a bit of an accidental and I guess I didn’t do a pension because I didn’t feel like a real business or grown up and now it’s a decade later 😅

Ha! All this adulting stuff is scary.

But yes, generally speaking if you have your own ltd company then pay pension contributions straight from company bank account to pension. Business can pay as much as £60k pa based on current rules and whilst that might be adventurous if you had one really exceptional year and loads more money available you can pay more in respect of past years (again based on current rules).

ISAs need to be funded from money in your personal bank account. AJ Bell do ISAs too so you can have both in same place.

You could probably benefit from an Independent Financial adviser review even just to check nothing else is being missed now you’ve been running your business for a few years. Ask them to invoice the business. Well done and good luck!

Thank you!

You could do the free Rebel finance course (look on Facebook) but I went for trading 212 after I heard about it on the Martin Lewis website. You then want to look at global all world funds rather than individual stocks and shares as your risk is lower and more widely spread

its also not very good

At 64 and retired, there’s no point in me changing it now.

Please don't just trust a recommendation from Chat GPT and certainly be very cautious believing anything anyone says on Tik Tok, especially when it comes to finance.

Maybe take a look at Invest Engine? I dont use them personally, my SIPP is currently with Vanguard but I am strongly considering a switch in the future. I'm not self employed, but if you are then I believe that Invest Engine allows you to set up a business SIPP account.

If you are early 30s then you have plenty of time to plan for your future retirement - likely 3 decades!

My SIPP is with Moneybox. I’ve had it open since April and I really rate it!