Is a Self-Invested Personal Pension or a Personal Pension Better?
When you control your own company, you also get to choose the pension you want. But; how to choose with so many conflicting ideas across the web?
What is a personal pension? How is a Self-Invested Personal Pension different? Is a Self-Invested Personal Pension better?
You may also be wondering if you should join the same workplace pension that is in place for your staff?
We can help you choose which solution makes sense for you, and here are the types of questions we ask ourselves to compile our advice:
What do you need from your pension today? What do you want it to do for you? Is this your starter pension and the priority is to build it up, from contributions to suit you or your company cash flow?
In that case, the priority might be a low cost, low maintenance solution. Often that might lead us to suggest a personal pension.
Are you saving up with a commercial property purchase or other unusual investments in mind?
These are tricky cases to advise you on, because the personal pension will provide a low cost solution while you save up, but you will need a Self-Invested Personal Pension to make those specialist investments.
Are you prepared to pay higher product fees for your person, even if your fund is small, just to avoid an insurance company?
In that case, we just need to make sure you understand how much more you will pay. For example, a person with a £20,000 workplace pension would pay around £70 in yearly product fees. The same investor would pay around £200 in a Personal Pension. Typical annual Self-Invested Personal Pension fees are around £350. However, some people feel that the extra cost is fair for the transparency.
Are you looking for a ‘forever’ pension?
Old-fashioned pensions are unpopular these days, and they sometimes have high charges. Our regulator is trying to help with that, by capping exit penalties that those old policies can charge. Perhaps we also need to adjust our attitude to those old pensions. We move on from our old cars, televisions, computers, even kitchens and houses as they become less fit for purpose.
Our Pensions get the blame for not keeping up with the times. Choose the pension type that is right for you today; try to future-proof it if you can, but do be prepared to revisit your pension decision in the future as time moves on.
If you are too busy to take on the research yourself, get in touch and let us help.
Have a look at our Read more section, where we have explored the differences between Personal Pensions and Self-Invested Personal Pensions.