Personal Pension Plans
If you’re looking to save for your retirement, a personal pension could be a tax-efficient method of doing so. You’ll receive tax relief on the money you contribute to your pension pot, and when it comes to withdrawing from it, you’ll usually be allowed to take up to 25% tax free.
There are many kinds of personal pension plans available, so you should consider your options carefully before you commit.
Which Is the Best Type of Personal Pension Plan for Me?
When deciding the right personal pension plan for you, consider the following three options:
A standard personal pension
- To obtain a standard personal pension, approach a large pension provider. They will be able to offer you a range of investment options.
A stakeholder pension
- This is a good option if you plan to make low contributions, as they have a lower minimum limit. There’s increased flexibility because you can stop and start payments at will and opt out at no cost.
A self-invested personal pension
- This offers a wider range of investment options, but they come with higher charges, and they require a greater degree of management.
Which Type of Personal Pension Plan Offers the Best Value?
Personal Pensions for A Young Person
You can start your personal pension at any time under the age of 75. If you’re self-employed or you don’t have a workplace pension for another reason – perhaps because you’re not working at the moment – then a personal pension could still allow you to save for retirement.
If you have a workplace pension but you want to save even more, it is probably better to contribute more to your pre-existing scheme instead. Your employer may agree to match your contributions, and charges will be lower.
Personal Pension Investment Opportunities
When you decide to invest in a personal pension, you’ll be offered different investment funds. You may choose to specialise in a particular type of assets like shares, property, or bonds. You may choose to invest in a specific part of the world.
Another option is to invest in a combination of different assets through a fund that combines government bonds with global shares. You should clarify with any potential pension provider whether the investments will be cautious, aggressive, or balanced in nature.
There is a good reason to invest in multiple funds or a fund that combines assets. It diversifies your portfolio, which mitigates the overall risk of your investment.
Who Are the Best Personal Pension Providers in The UK And How Do I Find Them?
The best pension provider for you will depend on your circumstances and your objective. It’s a good idea to shop around and make sure you choose a plan that meets your needs. Here are some of the factors you should consider during your search:
Fund Selection
Look for a personal pension company that offers a range of investment options that includes different asset classes. It might offer property-based investments, corporate bonds, and equity funds, for example.
It’s up to you whether you want to take a high-risk or a more conservative approach to your pension portfolio, but you should still look to diversify it to some degree. Then, if one investment fails, you can still depend on others to perform.
Reputation of The Provider
Since you’re entrusting your long-term savings with your pension provider, it’s important that you can trust them. Check out providers with positive reputations.
Although niche companies could offer you a great charging structure, it’s safest to stick with a provider that’s already tried-and-tested.
Providers that have been in operation for years and remain well-known now are popular for a reason. Balance performance with reputation for a good deal with a reliable and experienced pension provider.
Charging Structure
Analyse any potential pension provider’s charging structure in depth, as this will have an impact on your retirement fund’s overall value. You should expect administration fees and investment fund management charges, but the amount you’ll be charged varies from one provider to another. Why not compare them before you commit?
Be aware that some companies charge penalties for late payments or if you want to switch funds. You want a quality provider that meets your needs but also offers great financial incentives for choosing them.
Flexibility of Contributions
When choosing a pension provider, flexible payment structures should be at the forefront of your mind. Choose one that is compatible with your circumstances.
Someone who is self-employed should seek a provider that accepts frequent changes to their contribution plan, for example.
What Is the Best Way to Find the Top Personal Pension Plan Providers?
The first place you’ll probably look when searching for a personal pension plan provider is online. There are many comparison websites which will give you an overview of the most popular providers.
However, you should only take this as a starting point: to understand the details and how they relate to your situation, speak to an experienced, knowledgeable financial advisor.
The team at Prosperity Wealth have a wealth of expertise when it comes to personal pensions. We’ll help you find the right personal pension provider and offer to meet your needs and fulfil your financial goals.
How Do I Find the Best Performing Personal Pension Plans?
Again, comparison websites will be able to offer a snapshot of whichever pension plans currently have high-performing investment funds. However, this information isn’t helpful without some crucial context.
You need to know whether the underlying assets embody the risk profile that you desire for your pension savings. You also need to speak to experts who can project future progress: after all, past performance doesn’t guarantee ongoing success.
That’s why we at Prosperity Wealth would always recommend discussing your options with a pensions expert who can help match you with the most appropriate investment funds for your contributions.
