Hi, I've got an old D.B. pension, approximate value £12k. I would like to invest & top up each month. Who would you recommend? Also I would like to make an investment, & don't know where to start?
It's often confusing to decide ‘where to start' with pensions and investments.
Starting with your pension:
If you have left the company or are no longer an ‘active' member of the defined benefit pension mentioned, then you would not be able to invest further into it. Defined benefit pensions are generally based on the length of service that you worked for the company and the salary you earned while you worked there. Therefore, once you have left the company, you are no longer in service and cannot continue to build up new pension benefits. The benefits you have built up while working for the firm are effectively ‘deferred' and would normally increase in line with inflation until your company pension retirement date.
If you are still working for the company and the defined benefit pension is still building up benefits for you, you may have the option to buy what is referred to as ‘added years' by contributing more as a lump sum or monthly amount if the pension scheme would allow it. The easiest way to check this is to contact the pension administrators and to ask them if you have the ability to invest further into your pension.
If you are unable to top up the pension and you are unsure of the options available to invest in a pension, you could contact a financial adviser to advise you on the options available.
Similarly, an adviser can help you decide on other investments, help explain terminology and planning that you need to consider before investing. It's often a good process to go through as it helps you consider the longer-term plans for the money and the best place to invest it to suit your plans and goals for the money. We all have areas that we understand very well, and I often get similar questions to help give clients direction. It's easy for us to explain something that we work with every day and similarly, good financial planners should be able to bring the planning for money matters to life so you can understand how the different puzzle pieces fit together. Because you want to save into pensions and investments, it may be helpful for you talk this through to understand which balance between the two would suit you bets. Some financial advisers offer a free initial consultation, and they would explain the services they provide and cost so you can decide if you would prefer to employ a professional to help you.
You can use websites such as www.unbiased.co.uk or www.vouchedfor.co.uk to help you find an adviser. Alternatively, there are online investment providers that you can use to select a pension and investment yourself. Boring Money's Best Buys are chosen for their user review ratings, good value and good customer service. Have a look at Charles Stanley Direct, Hargreaves Lansdown, Nutmeg and AJBell Youinvest.
I hope this helps,
Helena Wardle is a Chartered Financial Planner at Sterling & Law.