Which type of private pension should I choose?

17 November 2015


I am 41 years old and would like to start a pension. Since I left the army in 2005, I have worked as a self-employed plasterer.I have an army pension from my 12 years’ service, which I can claim when I turn 60. Now I would like to start putting away money into a private pension ready for my retirement. But there is so much choice out there I don’t know where to start. Should I opt for a stakeholder pension, a personal pension or a low-cost Sipp?


The good news is that you already have some pension benefits built up through your Armed Forces pension. While this will provide a useful pension for you, it won’t be enough to retire on.

It is understandable you’re confused about the range of pension options available to you.

Thankfully, there isn’t a huge difference between a stakeholder pension, personal pension and so-called low-cost self-invested personal pension (Sipp), and most modern plans will let you start and stop contributions if you need to – without any penalties.

You’ll typically find a personal pension has more investment options than a stakeholder pension and a Sipp will have more options than a personal pension. All three options have their merits.

If you’re not confident in making your own investment decisions, a straightforward choice is to select a stakeholder pension from a mainstream provider and then pick its default fund option. This approach should stop you going too far wrong.

f you want to pick your own investment funds, a personal pension from one of these companies or one of the other main providers should provide you with enough choice. Each of these products will provide a list of available funds with the level of risk and charges explained.

You always have the option to transfer to a Sipp in the future as your pension fund grows and if you want to have a wider range of investment options.

Patrick Connolly is a certified finanical planner for Chase de Vere.