UKC

I’m a contractor (but not via a limited company) and I’m looking to start adding to some kind of pension next year. 

I have an okay one from my first job but since I left that company I can’t add any more to it.

My last contact enrolled me in NEST so I have a very small amount in that. But I don’t really know much/anything about them.

I guess that the other options would be to choose a private pension provider whom I can keep paying into no matter which contract I’m on, or open a SIPP.

Are there any pros or cons to going private vs sticking with NEST?

And is a SIPP only worth it if you’re happy to manage your own investments?

Any thoughts would be much appreciated!

I have a private pension since before NEST started, and now a NEST one too as my employer pays into it.

The advantage of a private pension is that you can choose to invest in anything you like. NEST is limited to choosing one of three risk levels IIRC, and that's it. I have a financial advisor who deals with the private pension, and looking at the results he earns his fee. But I wouldn't have a clue how to invest myself, so if I didn't have an IFA I'd just stick with NEST.

one of the biggest advantages of SIPP over NEST for me on my last inside iIR35 contract was that the umbrella company I used allowed me to salary sacrifice into it BEFORE both sets of NI and tax was calculated meaning I saved a lot on the NI contributions.

NEST contributions are done after NI calculations. I saved a lot of money but am older and was paying considerable amounts into it (half my salary 'cos I'm twice your age).

Though like u said re managing the SIPP my understanding of the UK Gilt market has wiped all that savings off for the moment - thanks Tory  mofo's

cheers

mark

Index trackers in a SIPP offer lower fees than managed funds and with consistent performance over long times, so perform well overall with less effort from you (maybe just ensure you have a mix across different markets). Stocks are riskier than gilts short term but over decades have given consistently better growth than gilts. Having some ISAs in your portfolio is worth considering, as the money isn't locked in.

There are some important tax differences in some circumstances. Maybe get some financial advice.

It’s worth asking the same question on UKB.

The pension that you have from your old employer, is it a DC scheme? If so, you might be able to able to convert it into a private pension from a company pension and continue to pay into it. Both my husband and I have done this.

If you’re a contractor you need a SIPP. As the poster above mentioned inside IR35 you can do salary sacrifice via your umbrella which reduces the ERS NI and apprenticeship levy.

If you do contract via Ltd. in the future your company can contribute to the SIPP too.

I use Fidelity it was simple to set up. There’s an app to keep an eye on things and chose investments etc. it’s all very straightforward.

Just so I get this right, say you got paid £1000 to the umbrella and wanted to put £100 into a pension.

Employer NI and apprentice levy are around 14%. So you would put it in before these are calculated, and also offset your own Tax and NI too? So the £100 actually only cost you £86 minus your own tax/NI amounts? Sounds like a good option if that’s right.

I don’t start until January so I’m not sure how I’ll be engaged exactly (definitely inside IR35 contract though). Need to get those details through, but I think I’ll look into the SIPP option if that’s right. Though the thought of managing anything like that fills me with a bit of dread.

So like offwidth said I will probably get some financial advice too to really assess what the best options available are.

My existing pension is a DC one so I could possibly merge that with a private one as stubbed mentioned too…

There are various worldwide and UK tracker funds available through Fidelity. As I said fees are lower than managed funds and suit those who don't want to be careful stock or fund watching and performance has been as good as the average managed fund (partly as you lose less on fees). Just don't put all your pension eggs in one basket (ie don't only use Fidelity).

Fidelity is a platform. Not the fund. So use the platform to diversify.the platform is irrelevant to spreading the risk

of course Fidelity have their own funds as well .

No shit. What if the platform goes bust in some future crash? SIPPs can package all sorts of diverse investments and in my view it's a bad idea to not have diverse investments in a pension, let alone rely on one platform.

The money is safe in the funds and are ring fenced..you should know that.That platofrom does not invest is the simple way of thinking about it.

Private pensions are protected by the Fscs guarantee, same as any other account. Obviously you'll want to spread it out over multiple as you go over the 85k limit.

I've a fidelity SIPP (and workplace pension), the platform is pretty straightforward and had a good range of instruments. 

No investment is truely safe and even money returned in 'an orderly fashion' can cause problems to the customer. Here is what Fidelity say (including FSCS protections).

https://www.fidelity.co.uk/how-is-my-money-protected/#2326646

Yep exactly that if the contributions are salary sacrifice- both EES and ERS deductions are calculated after the pension is taken. Most umbrella companies will offer this but definitely check. 
 

Be aware of the recent announcement on IR35 too it might give you another option come April next year. 

The platform itself going bust won't affect your holdings - there might be question about the underlying banks that platforms use if you hold a lot of cash.

I do have a concern about fraud/hacking though. If all accounts  on a platform are accessed and funds sold/transferred or records tampered with, how would you prove ownership? A small risk but potentially catastrophic. Having multiple SIPPS etc would be costly though.

You don't need a SIPP for salary sacrifice. A SIPP differs from a more typical personal pension by the range of investments permitted within it.

Platform providers such as Aviva and Fidelity are a good place to look.

As for funds, use a mix of trackers and multi-manager funds (funds with diversity built into them hy investing across a wide range of assets). You can select them according to broad risk categories. More risk = more potential for loss and growth.