Pensions and IFA's
 

I'm trying to sort myself out with a personal pension or SIPP at the moment.

I've got some old schemes to consolidate (which don't have loads in admittedly), and given the chop/change nature of my job I need my own pension now. I've had a bit of a 'wake up' the last few months about how much more I need to start contributing too.

I spoke to an IFA who said he'd sort me out with your typical personal pension such as Aviva might provide. He'd allocate between a range of funds based on my moderate risk appetite. Thing is he wanted at least 2.4k to set this up (and it might be more if I contribute extra the first year), then an ongoing 0.5% of my contributions. The 0.5% isn't much but the 2.4k seems too high for me. My guess is that he was trying to price me out because I'm not much of a high roller :). I hear IFA's are flat out these days due to new regulative changes.

I can sort an Aviva personal pension through Cavendish online for only £35, and I get a AMC discount!? I'm probably going to do this. I'm happy to allocate between 4 to 6 funds, but I don't want to trade with my pension pot. I don't have any special knowledge or insight to warrant being able to do this. This is the reason I am probably going to shy away from a SIPP, plus all the online platform SIPP's are priced opaquely and it is hard to get a grip on the true cost. I'll be buggered if I want 1.5% of my fund waltzing away each year.

Does anyone take out ISA's as well as contribute to a pension?

In the same situation myself. I went to an IFA myself and he told me to sort it out myself with Aviva. He would charge me nearly 2 yrs contributions. I now have a stakeholder pension with Aviva. I don't contribute much, but its better than nothing.
I was also advised to keep my previous pension where it is, rather than roll them into one. The reason is my old one was wound up on a very low charge basis, better then i can get today.
As for ISA's, i put in the max each year. I like them and they are easy to understand.

IFA's seem to be positioned as gatekeepers to pensions, and difficult to bypass. Thankfully I found an online broker/advisor. I would rather fund my own pension that an IFA's!

Do you get cash ISA's or stock and shares?

Thing about an ISA is you don't get the tax rebate that you get with pensions, but then with pensions you are only deferring tax because you will pay tax on your pension. My guess is pensions are more tax efficient especially if you pay 40%.

Same here many years ago

Cash ISA's. I also have a private pension, and when i get back into work, i'll join the company one. I want to keep my options open.

I did work out a scenario where i would save X amount in a pension, add it to the state pension to take me to the limit of tax free earnings. Then the rest in ISA's, giving me a tax free retirement.
Maybe not the best financial decision, but it would give me a big grin every time i heard people moan about paying tax. :D

The final point is, at the current rate, in 20 years time income tax will be 10% and VAT 40%. No escaping the greedy mits of the taxman. (not even in death IHT)

Try Hargreaves Lansdown, quite a few people I know have their sipps with them and seem to be happy with the charges etc

Yeah thanks, I was looking at them, sippdeal and alliance. It's all a bit opaque for me, and I think the range of funds with the sort of personal pension Aviva do is going to suit my needs for now. When I have a bigger pot I might be able to benefit from a Sipp.

You don't really need a SIPP if you are not interested in "playing" with different investment vehicles within the pension. If you just want ordinary regular type pension funds a vanilla personal pension will do just fine. I would only bother with a SIPP if you are intending to put commercial property into it or shares of a specific company.

If you don't have knowledge of where to invest then that is when you really should pay for the advice of an IFA. If you are confident you can do it yourself then all well and good, if not then you run the risk of losing far more than what an IFA will charge.

Typically you should only have 3 charges - the fund charge, the charge of where the funds are held (A "platform") and an adviser charge if you use one. These days you really should be able to "Pay as you go" with an adviser. Rather than just a annual charge you should be able to go on an ad-hoc basis and just pay for the advice as and when you desire.

You mention Aviva - their wrap charge AFAIK is 0.25% (least it is for ISAs). You can find very good cheap risk targeted funds for less than 0.5%. so even if you pay an adviser 0.5% for a 12 or 6 month review that to me seems decent VFM.

Sounds like good advise, but if I go with Hargreaves Lansdown I can get trackers as low as 0.1% with a £1 or £2 monthly platform fee on top. That is very tempting.

I'm confident enough to set myself up with a range of funds to suit my risk profile, this is pretty basic stuff that I don't need an IFA to do for me. Might review in a few years of course.

Only thing I would say is that HL might not be the panacea when it comes to DIY investing (who is???). This isn't from experience (Personally I use Aviva Wrap which is OK but its cheap) but some have said that the charges aren't quite as transparent as they could be. Again, not from experience.

I would also check a funds TER rather than its AMC - AMC might be 0.1% but the TER might well be higher - apologies if I'm teaching you to suck eggs but its worth a mention.

Vanguard have a decent selection of cheap funds and their risk targeted Lifestrategy funds are cheap and quite decent performers thus far.