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Just the word pension elicits the glazing over of eyes and the stifling of yawns, but it is for many of us one of the biggest financial commitments we will ever make. And for the rest of us, who think and hope the government will look after us in our old age, think again! It’s bad enough being old, but old and poor...
There are some attractive tax breaks when you invest in a pension. Now you can run your own pension, known as a SIPP, where you pick your own investments.
1. First things first – it is important to check whether there are any additional benefits attached to these old pensions before you consider what to do with them, so dig out the paperwork.
Look very carefully if it is a defined benefit or final salary scheme and always seek independent financial advice if you are unsure. Whilst doing this, consider pooling your past pensions (often, people have four or five old pensions for past employers with a few thousand pounds invested in each) and investing them in a Self Invested Personal Pension or SIPP.
pensions tend to
be gradually eroded
by high charges and
Managing your own
SIPP can solve these
3. Trustnet Direct offers a SIPP service which allows you to consolidate your past pensions (we’ll do the legwork of rounding up your investments and transfer them into your portfolio). From there, you can either change these holdings if you feel that they are not performing or invest more money into these funds or others. You can add any fund or share available on Trustnet Direct into your SIPP either by investing every month or in one-off amounts – or both!
Investing in a SIPP is tax efficient. Every £800 you invest will get a further £200 added into your SIPP from the government and if you are a higher rate tax payer further relief will be given as explained in the diagram below.
We have more information on how to open a SIPP at Trustnet Direct here: