Job Contract also contains forms to start a pension but what's best choice to make

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Sammie

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Hi,
I am about to sign a contract and have been asked if i want to join their contribution pension plan.

The funds offered are:

IRIS Fund – Medium risk - 100% investment
OR
Pension Gilt Fund – (Lower Risk)
Consensus Fund – (Medium Risk)
International Equity Fund – (Higher Risk)


I have been asked if I want to take the default which will be the 100% IRIS Fund or divide it % wise across the other funds.

My questions are:
1. is it wise to start a pension now,
2. can you please advise on what way I should spread the contributions or should I stick with the default.

I really have not a clue what to do and this has to be in before 1st Jan. I would have another 30 years until retirement.


Thanks
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

Is it wise to start a pension now?
Presumably your new Employer will contribute to the Plan, in addition to your own contributions. Why pass up on the Employer contribution. Also you will get tax relief on your own contribution at marginal rate. Assuming you are aged circa 30 or 35, I think you certainly should join the Plan (presumably there are also Death in Service benefits which should be considered - particularly if you have dependants).

What funds?
Based on a potential 30 year investment term I would certainly not opt for the low risk option at this stage. The IRIS model will give you a high Equity exposure in the early years but will seek to reduce risk (moving more into Gilts and Cash) as you get nearer to retirement. Equity markets may well continue to be volatile in the more near term (IMHO)but with a 30 year term I think you can take some risk in the early years, on the basis that Equity markets offer the potential for good recovery over a 5 to 7 year basis (assuming the world economy does not collapse entirely).
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

Is there an employer contribution?
Do you pay tax at the lower or higher rate?
Would you consider yourself risk averse?
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

Is there an employer contribution? - Yes there is 3%, then moving to 5% after 5 year service. company merger and service is carried over so i will be 5 years nex year.
Do you pay tax at the lower or higher rate? - Higher rate
Would you consider yourself risk averse? No

My question really is what % out of 100, should I divide over high, medium and low risks or is it worth the gamble and should I just stick to the 100% medium

Thanks
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

Given that you're on the higher tax rate and there's an employer contribution, I think you should definitely avail of the pension arrangement.

Given your own admission that you don't have a clue, I'd be inclined to opt for the IRIS fund as it is managed for you and will adjust the risk profile downwards as you near retirement age. But take professional advice from the scheme advisor before making your decision.

I agree with everything in Conan's post above.
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

LDFerguson said:
Given that you're on the higher tax rate and there's an employer contribution, I think you should definitely avail of the pension arrangement.

Given your own admission that you don't have a clue, I'd be inclined to opt for the IRIS fund as it is managed for you and will adjust the risk profile downwards as you near retirement age. But take professional advice from the scheme advisor before making your decision.

I agree with everything in Conan's post above.
Click to expand...

I agree with everything that Liam has said. Very good advice for you Sammie.
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

can't get anyone from the office.

so will i just go for the 100% medium IRIS FUND?
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

Unless you are conservative when it comes to investments the default IRIS is good. If you want low risk, then go for the Gilt fund.
 
Re: Job Contract also contains forms to start a pension but what's best choice to mak

thanks to all for your help!
 
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