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spunko

Private company pension? Yay or nay

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I'm almost 30 and wondering if I should start a private pension. The accountant is always telling me I should - but then they get a cut for a referral (££). Does anyone here work for themselves and what are your thoughts on setting up a low to medium level pension privately?  I am employed by my company - not strictly self-employed - but declare a small salary and the rest as dividends. I have some savings but nothing substantial and would describe my income as "quite good"  B|


I've looked into it before but never really found it that appealing when other apparently better investments are available. Anyone got any input?
 

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Set up a SIPP,  you can put in up to £40k per year fully tax deductible, hold what you like just like an ISA.

I'm with Hargreaves Lansdown for mine but only because they were the best when looking >20 years ago; they're perfectly fine but there may be better options out there.

I wouldn't go for an actual private pension scheme, too many fees and restrictions.

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11 minutes ago, Frank Hovis said:

Set up a SIPP,  you can put in up to £40k per year fully tax deductible, hold what you like just like an ISA.

I'm with Hargreaves Lansdown for mine but only because they were the best when looking >20 years ago; they're perfectly fine but there may be better options out there.

I wouldn't go for an actual private pension scheme, too many fees and restrictions.

Yip - SIPP

A smart and rich friend has one and uses Hargreaves as well.

I think you can avoid going through an IFA if you sign a waiver. Sound like you can have a lot of control with them. IIRC it's more less anything but residential pwopadee you can invest in.

It's what I would go for if I had £. My plan would be to buy a workshop with my SIPP and have my business pay rent to it. I don't know whether that would be the most efficient use of it. I (or my pension fund anyway) would need a loan to buy the workshop so it would all be very complicated.

This sounds all very grand and almost corporate but my business (and workshop) is tiny.

 

Anyway, SIPPS sound good to me but then I want control, and I want things I'm pretty sure normal pension schemes don't offer.

Still can't quite believe you're only just 30! Even more impressive you starting this thing we have. Thanks again!

 

 

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You're not going to get a state pension until you're too old for it to be any use (if you even get one at all!) so it makes sense to have some sort of contingency plan.

Outside of some work pension schemes (where the employer contributes heavily, or underwrites the scheme, making participation pretty much a no brainer) pensions are all a balance between the tax efficiency and access to the money. 

You've got lots of options. As well as the standard SIPP or ISA,  you're eligible for that new LISA for young folks that gets a 25% government top up. You can only put in £4k a year and you have to buy a house or wait 'till you're 60 to get the money penalty free, but I'd probably be taking it up if i want too old, and already in possession of a house.

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7 minutes ago, onlyme said:

SIPP. squirrel away to save tax, maybe buy business premises within pension pot at later date to run business from.

me too, just trying to keep up with living expenses atm, great plans to do more or less what you're saying.

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3 minutes ago, SpectrumFX said:

You're not going to get a state pension until you're too old for it to be any use (if you even get one at all!) so it makes sense to have some sort of contingency plan.

Outside of some work pension schemes (where the employer contributes heavily, or underwrites the scheme, making participation pretty much a no brainer) pensions are all a balance between the tax efficiency and access to the money. 

You've got lots of options. As well as the standard SIPP or ISA,  you're eligible for that new LISA for young folks that gets a 25% government top up. You can only put in £4k a year and you have to buy a house or wait 'till you're 60 to get the money penalty free, but I'd probably be taking it up if i want too old, and already in possession of a house.

This is gonna be a good thread. I think its pretty much the first outside off topic thread I've been on.

Already got LISA's to look into. I am not anywhere near having spare money for a LISA or a pension atm though, hopefully soon as I'm over 40.

God, I've changed my mind- this is a depressing thread.

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10 minutes ago, Carl Fimble said:

This is gonna be a good thread. I think its pretty much the first outside off topic thread I've been on.

Already got LISA's to look into. I am not anywhere near having spare money for a LISA or a pension atm though, hopefully soon as I'm over 40.

God, I've changed my mind- this is a depressing thread.

No LISA for you in afraid if you're already over 40 :Old:

 

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Something to keep in mind as well is that the pension rules can and will change over time.

When i started my first job you could access your pension at 50. It's since gone up to 57 for me, and will probably be going higher still. (It's shadowing the official state pension age by 10 years)

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5 minutes ago, One percent said:

Set up an alternative forum where people can debate the issues of the day without censorship. Slowly build said forum until the numbers are vast.  Keep advertisers away so that the forum is not influenced by corporate business.  

Sell at a vast profit to fubar.  Job done. B|

This is a variant of the "be so rich that you don't need a pension" plan.

It's actually not such a bad plan. xD

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14 minutes ago, SpectrumFX said:

No LISA for you in afraid if you're already over 40 :Old:

 

No, that would be for my daughter, if I was rich.

If I could keep off this site and not fanny about procrastinating with other shit I maybe could be rich. Must get back to work.

I'm interested in finding out more about all this so will read more later, I really do need to work, what's the time?

fucking hell- It's half three

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14 minutes ago, SpectrumFX said:

Something to keep in mind as well is that the pension rules can and will change over time.

When i started my first job you could access your pension at 50. It's since gone up to 57 for me, and will probably be going higher still. (It's shadowing the official state pension age by 10 years)

I view the SIPP as being "my" money as it's in my name, in my account, and not merged in within a bigger pool of investments in which I have a notional share.

The government can change the rules on access (up it from 55, change the tax free 25%) but I can't see them doing anything sweeping to it like a global levy which I could see their potentially doing to pension funds.  Whilst I've got decent company pension schemes their investing in thirty year bonds paying three tenths of fuck all means that there is trouble being stored up there and, not wishing to tempt fate, have never totted up what I could get from those when making my plans.  It will just be a nice bonus at 65 or 67 or whenever.

The only big damage that could be done to all pensions has already done by that arch blockhead Gordon Brown in stripping out the dividend credit.

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31 minutes ago, Frank Hovis said:

I view the SIPP as being "my" money as it's in my name, in my account, and not merged in within a bigger pool of investments in which I have a notional share.

The government can change the rules on access (up it from 55, change the tax free 25%) but I can't see them doing anything sweeping to it like a global levy which I could see their potentially doing to pension funds.  Whilst I've got decent company pension schemes their investing in thirty year bonds paying three tenths of fuck all means that there is trouble being stored up there and, not wishing to tempt fate, have never totted up what I could get from those when making my plans.  It will just be a nice bonus at 65 or 67 or whenever.

The only big damage that could be done to all pensions has already done by that arch blockhead Gordon Brown in stripping out the dividend credit.

I'm considering taking all my company schemes as soon as i can access them, just to get them into payment, as it would be nice to see some of the money before I'm dead. xD

I'll have to see how I'm fixed at 57, or 58, or whenever it is they'll actually let me see the money. :Old:

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3 hours ago, onlyme said:

......maybe buy business premises within pension pot at later date to run business from.

Frank, onlyme and others know far more about SIPP but I have a friend who did exactly this about 10 years ago and although I understand it made the retirement sale of the business slightly more complicated, proved to be financially extremely worthwhile.

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3 minutes ago, Duck said:

Frank, onlyme and others know far more about SIPP but I have a friend who did exactly this about 10 years ago and although I understand it made the retirement sale of the business slightly more complicated, proved to be financially extremely worthwhile.

No big investment hotshot me, same as you - have seen it work well as you are effectively recycling your business costs direct back into pension downside is you need a steady business with stable long term income, it is concentrating risk and if your business goes under you need to find a suitable tenant. However other upsides are you have control over your own premises, can sublet if you want, change layout and use just the amount of space you need and let the rest. My accountant has done that and they seem to know a thing about money!

 

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5 minutes ago, Duck said:

Frank, onlyme and others know far more about SIPP but I have a friend who did exactly this about 10 years ago and although I understand it made the retirement sale of the business slightly more complicated, proved to be financially extremely worthwhile.

I think doing a lot of if yourself not going through an IFA would mean there were less fees/commision and so less of a bill.

sorry duck, couldn't resist.

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Just now, Carl Fimble said:

I think doing a lot of if yourself not going through an IFA would mean there were less fees/commision and so less of a bill.

sorry duck, couldn't resist.

Take the mickey out of my facial appendages with a nasal proboscis like that....I think not madam!

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7 hours ago, One percent said:

Set up an alternative forum where people can debate the issues of the day without censorship. Slowly build said forum until the numbers are vast.  Keep advertisers away so that the forum is not influenced by corporate business.  

Sell at a vast profit to fubar.  Job done. B|

Reminds me of an old South Park meme.

1. Setup new forum pulling in other members
2. Run it for a few months
3. ???
4. Profit

Thanks for the advice re: SIPP. I did look into it earlier in the year, only issue is I'd need to find another office. The current landlord is a  Bentley-driving gentleman farmer who will abso-fucking-lutely not sell it to me.

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I'll add the only piece of advice I think I can contribute.

With pensions better to start early if you can. 30 is an excellent age as I suspect many do not give it serious consideration until they hit their 40s and 50s.  We can't know what will happen to pensions, but you will hopefully get old. I also take the contrarian view that a lot of normal people don't invest enough in pensions, and also generally rubbish them which makes them worthy of re-examination. When the masses run in one direction, it's always worthwhile seeing if another direction is better. 

 However, you do it I'd also consider front loading it if you have the spare cash (and stay under the various limits - yearly and lifetime).  Maybe your life and lifestyle will change, maybe it won't - but I think your future self will thank you for it if you manage to get a good stash together by the age of 40. And doing so opens up all kinds of possibilities e.g. early retirement perhaps in your 40s if combined with other investment approaches. 

In my early 30s I was still full of enthusiasm about my career, my work and my side businesses. A decade and half later in my mid 40s it now feels like a bit of a treadmill and work-life balance seems more important. The good news is that I can just about afford to retire and am now considering going part-time. Having saved for and bought a house in a cheap area at 40, I then started seriously saving and loading up the pension.  You may not end up wanting to take the option of cutting back on work in your 40s, but its good to have it there IMO. 

 

Edited by SCC

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My worry with pensions is the fact it's locked up until a certain age, and I can tell you I have absolutely no fucking intention of working until that age. My main focus is my S&S ISA as I'm going to want to bail out before I can access my pension. Tax relief versus availability at any age I guess.

I do pay into a workplace final salary pension though as I've always paid into it since I started here (over a decade) and it makes no sense to stop now. I see it as spreading the risk somewhat, and yes I know I'm lucky to be on a FS scheme especially at my age.

Are you intending to work until the age when you could access a pension would be the crucial question to my mind.

[EDIT] Though I'd certainly say save as hard as you can now whichever route you take.

Edited by Inoperational Bumblebee

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Always liked this example about starting early! 

Let’s consider two investors: Captain Sensible and Captain Blithe.

From the age of 25, Captain Sensible invests £2,000 per year in an ISA for 10 years until he is 35. At 35 he stops and never puts another penny into his fund again.

Captain Sensible then leaves his nest egg untouched to grow until he hits age 65. He earns an average annual return of 8%2 and when he looks at his account 30 years later, he has £314,870 to play with.

Captain Blithe, meanwhile, spends the lot between the ages of 25 to 35. Only when he hits 35 does he sober up and start tucking away £2,000 per year in his ISA. He keeps this up for the next 30 years until he reaches 65.

Captain Blithe earns an average annual return of 8%, too. He ends up with £244,691.

To recap:

Captain Sensible has invested a total of £20,000.

Captain Blithe has invested a total of £60,000.

Yet Captain Sensible’s pile is worth over 28% more than the late-starting Captain Blithe’s – even though Sensible only invested a third of the amount.

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On 4/19/2017 at 14:18, spunko2010 said:

I'm almost 30 and wondering if I should start a private pension. The accountant is always telling me I should - but then they get a cut for a referral (££). Does anyone here work for themselves and what are your thoughts on setting up a low to medium level pension privately?  I am employed by my company - not strictly self-employed - but declare a small salary and the rest as dividends. I have some savings but nothing substantial and would describe my income as "quite good"  B|


I've looked into it before but never really found it that appealing when other apparently better investments are available. Anyone got any input?
 

I would mostly invest in a Stocks and Shares Isa's that pays out a monthly Income and use the Income to pay into a Sipp.

If I was 10 years younger I would have mainly used ISA's as the government keep changing the Pension rules on what age you can access your money.

Also if your employer offers a pension they will no doubt contribute money into that scheme so you are getting free money off them.

Only use an ISA if you are the type of person who won't be tempted to dip into your funds.

Edited by M S E Refugee

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