I assume your son does not have a pension at present. For a sole trader, the only pension option is some variation on Stakeholder, Personal Pension or Self-Invested Personal Pension (SIPP). SIPP offers the widest investment choice, in theory allowing all manner of unit trusts, OEICs and pension funds along with such sophisticated offerings as commercial property or property partnerships.

The typical charging structure for a SIPP is a flat set-up charge and a flat annual fee. These flat charges can be surprisingly low for some of the online offerings, but in practice these tend to have a restricted list of available investments. Also, do not forget that the individual investments held within the SIPP will have their own charges. As a result the total charges over the years can be quite high. Although the effective minimum level for a SIPP scheme has reduced significantly, largely due to the development of these online offerings, it is still unlikely to be cost effective to start a SIPP arrangement unless you have a sizeable lump sum with which to ‘seed’ it. This can take the form of a transfer from another form of pension arrangement, but since the implication is that your son does not currently have any form of pension, realistically you are probably looking at building up a fund via another form of pension, with the possibility that you could move this into a SIPP at a later date.

To qualify as a Stakeholder Pension, a scheme must meet certain criteria such as restricted charges, low minimum contribution levels and penalty-free transfers. For someone just starting out with a pension I think they have a lot going for them. Over the long term, these can be considerably cheaper than personal pensions or SIPPs.

As with most investments, asset allocation is vital. If necessary, take paid-for advice on the amount to save and the right asset mix. This will be driven by the investment timescale, your financial objective and the level of investment risk you are prepared to take. Do not worry too much about the individual funds in which you invest. So long as you have the correct asset mix for your circumstances you should be on the right lines.

However, it is important to review things regularly over time, and maybe consider switching to a SIPP in the future, when you have built up a reasonable fund, or have become a more experienced investor and want the wider investment choice.