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I have been a sole trader for a while and recently been employed full time, as part of the deal I have been promised an employer contribution pension but it is up to me to decide what to do. What are the best options for pensions - stakeholder, private etc. The company I work for has no pension scheme.

I think I will just look for a personal pension scheme somewhere, any good ones out there?

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All of the options for you fall within the umbrella of "personal" pensions, but there are various specific types:

  • Stakeholder: Low charges, generally fairly restricted range of investments.
  • "Normal": i.e. no special features.
  • Self-invested (SIPP): Generally the highest charges (though not necessarily any more than normal personal pensions), widest range of investments available; you can direct the investments completely.

So what you should do is first decide what kind of thing you want to invest in - e.g. unit trusts, bonds, individual shares, etc, and then find the cheapest option within those constraints. UK unit trusts are probably the standard option if you're a long way from retirement and don't want to think too much, and should be available through all of the above routes. It's worth looking closely into their charges as often they are hidden in the buy/sell spreads or quietly deducted from the fund value each year.

The direct.gov page is fairly helpful on the basics.

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The theory behind stakeholder pensions is that the charges are low, but in practice, you can get even lower charges with a SIPP - see everyinvestor.co.uk/personal-finance/pensions/… and h-l.co.uk/pensions/sipp/charges--and--interest-rates - so there doesn't seem to be a lot of point to them to me. –  Tom Anderson Mar 15 '11 at 23:33
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