Pensions are not my forté, as I'm not a financial advisor. I am aware of Nest, TPP et al., and how they are there to facilitate compliance with AE.
However, I have a director who wants his company to pay into a pension for him. He wants the company to pay contributions as a method of reducing the company's taxable profits and providing for his retirement. Quite normal.
I advised he speaks to an IFA but he says, why can't he achieve the same objectives by opting into the nest pension scheme, same as his employees do.
My thoughts are that Nest and the rest are POSSIBLY crap pensions in that they will provide a minimal pension for employees in retirement, but that the director himself would be better having a separate scheme.
I know there are minimum standards etc, but I am hearing that Nest, TPP and the other one are good enough for employees but not good enough for directors!
My thoughts above are purely from snippets picked up from different sources.
It's difficult as the last IFA I referred a client to was intent on selling income protection insurance, sickness insurance. Kitchen sink insurance and anything that earned him a bit of commission.
I assume a nest pension is not going to be as good as a Standard Life pension?
Excuse my ignorance. I've never had any interest in pensions but have been asked the question.
(I'm on my phone typing which is horribke)
Thanks in advance
Replies (10)
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Why do you think anyone on this forum can answer your questions....do you really want me (or anyone else you don't know) to advise you on the merits of NEST v Standard Life? You have advised your client to seek professional advice from an IFA, as you should. If he chooses to ignore that advice so be it, it's his company and his pension.
Additionally, the majority of accountants in practice are not registered to offer investment advice so couldn't answer you. Those that are, are likely to expect be paid for such advice.
Given you are talking about money purchase I believe the main matters that differentiate one provider from another are:
1. Service standards re running the scheme/assistance running the scheme- how valued?
2. Fund/investment choices- is a wide range better?
3. Charges -these will reduce performance and should never be underestimated re their compound effect on final fund ,but can one differentiate impact of fee per contribution as against fee based on fund value etc to decide best fit? (comparing apples and pears)
I have read that the ongoing charging structure of NEST is say higher than with Peoples, but of course Peoples charge a set up fee of £500 plus vat ( £300 plus vat through an agent)
Now which is best choice will be determined by all of the above, particular factors re particular clients and is likely beyond my paygrade.
From a personal viewpoint I prefer my SIPP with Hargreaves Lansdown, max £200 fees p.a., but this does not conform re AE requirements so I am currently setting up employer schemes re my employer's companies- my choice is People's but I am self interested in my employer picking up the set up cost and my (and other staff) having lower ongoing charges, however this is not advice merely what we are doing in house.
Me - I'd just point them in the direction of a financial adviser.
Most of mine don't earn enough to make a significant contribution, anyway. When it tops out at 8% (between employer and employee), most of my directors will still only be paying 8% of about £2000. £160 isn't going to buy much of a pension.
There are exceptions, obviously.
@MM - I always point them in the direction of an IFA.
Sorry can't advise on the suitability of Nest/PP/Now or Smart for a scheme specifically for the director.
Suggest to him that he needs to find a specific scheme which best suits his age, lifestyle, income requirements, attitude to risk etc and that an IFA is best placed to deal with it.
You're not local to me otherwise I'd recommend the IFA I use personally and for business. We have referred a lot of work to each other
There must be some good one's near you though that you could set up a reciprocal referral arrangement.
Another vote for an IFA from me. The problem is your client might not want to pay for anything - and is seeing you as a 'soft touch' to help him on the cheap.
The problem comes when things don't quite work out for him.
At least if you have referred him on you won't get dragged in.
However, I am sure your comment is probably correct in that pukka established pension funds are probably more suitable than these newbie 'take all comers' schemes.
I would do the same, I looked at nest and the others and was not particularly impressed, I eventually had a very detailed conversation with smart https://www.autoenrolment.co.uk/
who were exceptionally helpful and can even put together a seminar fr your clients in order to give them the info they need to make a decision, I was on the verge of outsourcing but this turned the whole AE nightmare into additional fee income.
Morning
Seem to remember Tim Good mentioning on here that they offer a comprehensive package inc their IFA for £299 - https://www.absolutetax.co.uk/products/simplifying-auto-enrolment