So, who contracts on here, and what have you done about setting up a pension?
Any advice greatly listened to.

I retained my stakeholder pension that was set up at my last place of PAYE employment since it has only a 1% pa fee.

I make a monthly allowance in my accounts/tax and then squoosh* chunks of it over periodically to my pension fund provider (Aviva) as and when there’s spare dosh in the Co. account. It’s not my only retirement planning investment, just an alternative place for some long term investment capital. IIRC its only about 20% of my long term savings/retirement planning as until recently although it was tax advantageous the drawdown restrictions were too prohibitive to provide the flexibility Id want when I did get to draw on it.

* technical term for BACS I gather.

Personal pension, company contributions.

When I was a contractor I did a simlar thing to Stoner. Monthly payment to a stakeholder pension and I made sure I did a tax return to get all the tax advantages. You’d likely struggle to get adequate growth elsewhere to compensate for the tax rebate.

Got various pensions from my permie life, and one had an management company and financial adviser that was happy to continue to support people after they left the company. Since going contracting, had a chat and he advised to keep the pension going but to have my Ltd company make all the contributions to it, and I’ve just done that ever since. Basically means it’s an expense that reduces the corp tax bill, isn’t subject to income tax or means paying myself more gross to pay it personally (via PAYE), which may push me more into the higher rate etc.

Though more recently I’ve been getting my head round what actually happens in retirement and been realising that annuities need huge funds to even dish out a bare minimum of income. Current estimates I read are you need about £500k in the fund to get about £15k pension. My pot at the moment only estimates half that and I thought I was putting a fair bit in.

I’d be topped up a bit by some of the earlier pensions but not much in those, and then there’s the state pension but I’ve always taken the position of assuming that may not exist by the time I retire.

I contract through my own Ltd Company so I make company contributions to my SIPP.

Similar to above. Consolidated many pension plans when I started contracting. Now do a stoner type sploosh at the end of every tax year depending how much money is in the company account. Financial advisor has some fairly funky software showing when I can retire. My preferred date does mean selling the house and disinheriting the kids, but seems like a fair price to pay.

We pay our FA for advice, he’s not on commission. I’d recommend that if you’ve got permie/contract stuff going on. He’s been very helpful around whether we’re better taking divi’s to pay off the remainder of the mortgage or pay pensions directly from company.

Same as Stoner (again!) tho, I’m not sticking it all in a pension.

Shall follow this. Mine is currently going into a cash ISA until I have a good idea. Possibly will buy property with the cash. When I did the maths a while back a normal pension didn’t seem that advantageous for the loss of flexibility.

TTS – contractor (well, freelance) but probably only different basis to you. Self employed, sole trader, no LtdCo.

I simply make contributions (need to keep an eye on max. permitted) into personal pension (SIPP). Declare on tax return as such. Benefits are tax relief contribution, that an ISA for example doesn’t give.

Edit – and as others are listing their chosen SIPP, I’ll do too – Alliance Trust Savings..

SIPP

been getting my head round what actually happens in retirement

Big changes in April, you are going to have more choice.

Hargreaves Lansdown SIPP, takes minutes to set up online.

II SIPP

http://www.telegraph.co.uk/finance/personalfinance/investing/sipps/10607824/DIY-pensions-The-cheapest-Sipp-fund-supermarkets.html

I was with the Equitable Life, they came highly recommended.

When I did the maths a while back a normal pension didn’t seem that advantageous.

A pension is no different to any other investment in terms of returns as the funds are generally invested in the same sort of things. There are benefits in terms of tax which go hand in hand with some restrictions (i.e. when you can access your money) so once your short term needs are met the only reason I can think of to not have a pension is if you don’t actually pay any tax.

and yeah, my FA advised to not depend on pension alone.

Mortgage paid off currently, though looking to get a bigger house so mortgage needed for that. Can always move somewhere cheaper in retirement though. Have other investments also, though returns are crap at present.

When I did the maths a while back a normal pension didn’t seem that advantageous for the loss of flexibility.

That is true, but it just means that you dont put ALL your long term plans in a pension. ISA’s represent about 20% of our long term investment holdings (pension 20%, other share investment funds 20%, property the other 40%).

On the payroll but no pension – I just pile stuff into a personal pension every month.

Hargreaves Lansdown SIPP

We use this company as well. Seem to be very good/very professional. There’s so much going on putting cash aside for Uni for the kids, working out what to do with rubbish endowment policies that are coming up soon, etc, etc, I quite like getting a second opinion and some ideas hence paying a financial advisor. I know others feel more confident in their investment decisions 🙂

We’re split between ISA/Pensions for both of us and a pretty firm belief we’ll sell this (big) house mortgage free when the kids are gone for good and maybe rent for the rest of our lives. It’ll never happen 😉

Cheers all, I’m a Ltd co. Shoukd probably have said, all new, so just trying to get it all squared away..

I’ve been contracting through my ltd company a year tomorrow which is going better then I could have ever dreamt. I haven’t started a pension yet but I’ve seen an IFA who pretty much recommended as others have said above.
If you’ve only just started contracting I wouldn’t worry about a pension until you’ve got a good war chest for sickness, between contracts….

You may know this already but as an FYI if you are operating through your own Ltd company. Letter “my company” received today…

“Every employer with at least one member of staff must automatically enrol those who are eligible into a workplace pension scheme and contribute towards it”.

Bearing in mind as a one man band you are the one member of staff in your own company.

So if you’re a ltd and just holding off with pensions, you may have no choice. Likewise the same if operating through umbrella companies I assume. Unless there are exemptions. I haven’t spoken to my adviser or accountants yet about this, though I’ve already got a scheme my company makes contributions into anyway.

If you’ve only just started contracting I wouldn’t worry about a pension until you’ve got a good war chest for sickness, between contracts….

I’ve come to a point where this is the case – and a point in my life when I realise I’d better do something about a pension or it’ll be too late to bother with…

Anyone self-managing SIPPs?

I’m pretty green about all this stuff, but happy to devote some time to learning it and not adverse to gambling with my money/future instead of letting someone gamble with it for me

^ Doesn’t apply to sole director companies with no other employees. Also to be deemed an eligible employee, you need to have earnings over £9,440 per annum.

I self manage mine but have a background in advice. Its not rocket science, there are are plenty of managed or tracker funds available if you don’t want to jump in at the deep end. Just make sure you are absolutely happy with the risk associated with your particular investment choices.

As others have said, I contract through a Ltd Co and make contributions from it into a personal pension (with Scottish Widows)

The pension itself was recomended by an IFA and the investment portfolio within the pension was ‘managed’ by him too for an ongoing fee. In the first two years it underperformed the FTSE massively, so I fired him. At some point I’ll be transferring it away from Scottish Widows as the ability for online management is basically non-existent. I’ll probably go to Hargreaves Lansdown.

^ Doesn’t apply to sole director companies with no other employees. Also to be deemed an eligible employee, you need to have earnings over £9,440 per annum.

Says £10k on their web sites, but while I’m over on salary alone due to what my accountants advise, fair point on the sole director. Doesn’t mention that in the letter I got or on the site it directs you to (www.tpr.gov.uk/letter) but does here: http://www.nidirect.gov.uk/how-your-situation-affects-your-workplace-pension

Current estimates I read are you need about £500k in the fund to get about £15k pension.

Not sure where you got this from but a “good” annuity will get you circa £5,800 per 100k at the moment. 5 X that circa £29k pa.
Bear in mind you will be paying tax on anything above your personal tax allowance so unless the benefits of putting into a pension are significant (employer matching contributions for example) then as Stoner says it should only be part of your planning and not all, if you expect it to provide you with more than around £14k pa.
My planning includes ISA allowances invested in various funds.

surfer – Member
Not sure where you got this from but a “good” annuity will get you circa £5,800 per 100k at the moment. 5 X that circa £29k pa.

Not too sure where as can’t find it now but think I was looking at stuff estimating to when I retire (40s now, so 65 or whatever), and it factors in inflation. It was saying what I would get would be equivalent to £15k-ish in todays money for around a £500k pot. In reality yes it would be a lot more, but what it buys would be a lot less.

Though might have been reading this as well, but it’s misleading as it’s saying £500k if you aren’t entitled to the state pension. http://www.telegraph.co.uk/finance/personalfinance/pensions/9806087/A-living-wage-pension-Itll-cost-you-500000.html

£500k is way out of my range though anyway looking at the performance of my pensions and what I contribute.

Tax avoiders!

avoiders

^ yep, as the law allows 🙂

ISAs and pensions, we all have them. All tax avoidance 😉