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At a loss over pension decisions?

Hi,

I know I need to go talk to an independent fiancial adviser about this but, before I do, I would like to get some advance information as I am pretty unclear about what I can and cannot do pension wise. Any useful advice, information would be welcome.

I am an IT contractor who, since '96, has been running my own limited company as a consultancy. Back in '96 I took out, on the advice of an IFA, a Executive pension with Standard Life. Each year I would pay in about 4 - 6K and my 'salary' was not salary but merely was a dividend taken out of the company at the end of each year.

I believe Gordon Brown changed the rule around 2000 and, between 2000 and

2001, I actually - now I know stupidly - paid myself a salary which allowed me to continue to pay into my Executive pension. The downturn in the IT industry post September 11th meant I went 20 months withouth making a penny profit.

I now am seeing an upturn in work again and am paying myself purely via dividends but, I assume, this means that I cannot pay anything into my Executive pension - and I think there have been further changes in EPs that now make them very poor pension plans indeed - whereas they were once great plans pre-Gordon Brown - nowadays.

So, I am thinking what I should do pension-wise? Am I capable of paying into an EP if I am only paying myself a dividend? Is an EP the best thing to even consider paying into assuming the changed regulations governing EPs plus my IFA's commission charges? Is my EP pension pot just going to erode over time? Should I consider taking out a SIPP or one of the low-cost pension plans myself?

This is further complicated by, prior to becoming self-employed 'proper', I worked in the Media on a ongoing monthly contract - you weren't an employee so you weren't allowed to pay into the company pension so I took out a private pension plan with the company that everyone - all the financial press - was saying was the best at the time - Equitable Life. Oh boy, the money I have invested has stayed the same for more or less the past 3 or 4 years but I believe I cannot move this to something that has more growth potential such as, for example, a fund by the likes of Fidelity!

Gee, after writing this I am considering why I am asking about investing in pensions at all. I was going to put money into an ISA by tomorrow - April

5th - for shares but now I am inclined to stick it into a mini cash one instead!

Anyhow, thanks for reading the rants - any useful information would be welcome.

John.

Reply to
John Smith
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I would be very careful about putting any money into an EPP. These schemes have the pension level limited by a formula based on 3 of the last 10 years of your employment prior to your retirement, which could leave you with a locked pension fund which you cannot draw out properly. The salesmen never mentioned this at the time.

I would move the EPP to a PP if possible (may fail the GN11 overfunding test), and then the argument comes down to personal pensions versus DIY investments - much discussed here :)

Reply to
John-Smith

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