…I now have the chance of going into our works Stakeholder pension, but is it worth it ? Or should I put more into my Personal Pension or is it too late to start a SIPP, If I did go down the Stakeholder route which investment fund should I chose and should I put in the maximum contribution ( the Stakeholder pension is with Standard Life). I await your reply with interest.

Kind regards, Neil

IFA Steve says:

I won’t be able to give specific advice without knowing your full situation however, the answer to your questions would need to factor in issues such as:

• Your attitude to investment risk, investment experience and your capacity for loss
• Charges on the current stakeholder pension, and other pension products.
• Whether the new employer will match any contributions if you go into the stakeholder pension or not, if yes this will almost certainly be the best choice.
• Whether you have looked at other options such as ISA’s and national savings products.

I would suggest you get advice from an Independent Financial Adviser, regards, Steve

Steve Weisner Dip PFS, BSc (hons)
Independent Financial Adviser
Radcliffe & Newlands
3rd Floor,
14 Bonhill Street,
London
EC2A 4BX

IFA Richard says:

Dear Neil,

Firstly we can’t provide a definitive answer to you without first getting details from you about your current circumstances and future plans through a financial review, however in general terms there are benefits and disbenefits from pension contributions – particularly later in your working life.

The benefits of pension contributions are the tax relief payments they attract from HMRC, this is where your Net contribution (after tax) is restored to a Gross contribution (before tax), for example:

You earn £100 Gross
You are paid £80 Net (after tax at 20%)
You contribute to your pension a payment of £80 Net
Your pension provider automatically claims back from HMRC on your behalf £20 (Tax relief)
Your total contribution is £100 (£80 Net from you + £20 Tax relief claimed back from HMRC)

What this fundamentally means is that you have a savings vehicle that even before any growth is +20% every time you contribute!

The downside to this arrangement is that your funds, once paid into a pension fund, must remain within a regulated pension environment unless withdrawn as part of a tax free lump sum or taxed as income when you begin to ‘drawdown’ your pension fund.  Of course, there are many variations to this and the pensions market is changing and evolving all the time but in principle this is how it operates.

Given your situation Neil, if you decide to commit funds into a pension scheme, you get the benefits of tax relief but the disadvantages of lack of total control of how you access your funds in the relatively near future.  If you do decide to contribute to a pension then which you choose will be based upon charges, fund choices, performance, flexibility at retirement and what your individual plans are.

I would be happy to assist you further and discuss what options we can make available to you, please contact me on my direct details below if you would like more clarification.

Kind regards,

Richard Rogers DipFA
Financial Adviser
Shepherds Mutual Solutions
Telephone no: 0161 495 6412
Fax no: 0161 428 3666
[email protected]

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