Sarah, 38

Having worked for herself for many years, Sarah is used to taking charge - if she doesn't, who will? Now she's applying that thinking to her retirement. There are old pensions hanging around but are they still working hard enough? And is a pension alone enough?

Confidence level: 4 out of 10

"I used to be with the NHS and they were really good about setting up a pension for you, and I paid into that pension for about 10 years. But I'm not with the NHS now, I work for me, I'm my own boss, so it's actually been about 5 years since I paid into a pension. Which is almost embarrassing to say.

"I have very little knowledge, if I'm perfectly honest, about pension saving. It's a thing you have to have to do, but previously it had been automatic. Now I'm thinking about where should I start, how can I compare the pension provider companies available, and also if pension account is actually what I need. I've heard about Lifetime ISAs as a good alternative. I suppose I just need some clarity."

My pension planning question...

"I'm a self-employed sole trader and need to start a pension, but have very little knowledge of it. Is a pension with NEST a good option or would I be better off going with a company such as AJ Bell Youinvest or Vanguard? And would it be a good idea to start a LISA as well as a private pension?"

Answer by Susie Bewell, Raymond James

Chartered Wealth Manager - Meet the experts

he following information should be treated as a generic guide and not advice.

Saving into a pension is a fantastic idea, and starting relatively early (being in your 30s still counts as early!!) will really reap benefits. By saving earlier, you are invested for longer, giving more time for your pensions to grow – which could really improve your quality of life in retirement.

Your contributions into your pension are also boosted by income tax relief (https://www.boringmoney.co.uk/learn/learning-paths/retirement-guide/) on money you contribute, the amount being dependent on your individual circumstance. So, if you’re a basic rate taxpayer, and want to add £1,000 into your pension, you’d pay £800 and HMRC would add £200.

The Nest scheme has advantages as it is fairly simple in structure: all admin can be done online and there are a fairly small number of funds to chose from. The annual management charge is reasonable at 0.3%, although as a % based fee this will get bigger as your pot grows.

Unusually they have a contribution charge, which is a little high at 1.8% on all contributions paid into your pension.

So if you are happy to keep it simple, Nest may be attractive. But what if you want a little more choice in terms of the investments for your pension?

SIPP (https://www.boringmoney.co.uk/learn/investing-guides/product-guides/private-pension/) stands for Self-Invested Personal Pension, so as the name suggests, you have more choice on the investments you will hold to grow your pension savings. Vanguard offer a range of 75 low-cost funds and charge 0.15% a year. AJ Bell Youinvest’s annual charge is 0.25% and there are charges on the dealing you do, but you can buy individual shares and from a range of over 2,000 funds.

So if you have a real interest in what your pension is invested in, a SIPP might appeal. Of course, if you’re not sure then asking an independent financial adviser to guide you on the investments which would be right from you personally may be the way forwards, leaving you time to concentrate on your day job!

A Lifetime ISA (https://www.boringmoney.co.uk/learn/investing-guides/product-guides/lifetime-isa/) (LISA) is different to a pension in that you can pay in up to £4,000 a year, and the government adds £1 for every £4 you have contributed at the end of the tax year, so in a year you would have a maximum bonus of £1,000. You have to be under 40 to open one (but you can keep contributing after this).

The inflexibility with a LISA comes because if you withdraw the money before age 60 (unless you are buying your first home) there is a penalty charge of 25%. There are not a huge number of providers offering LISAs, which may impact the investment options you have, and therefore the growth towards your retirement. A normal Stocks & Shares ISA (https://www.boringmoney.co.uk/learn/investing-guides/product-guides/stocks-shares-isa/) might be appropriate as although you would not get the government bonus, you have flexibility to access it whenever you would like.

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