How should I compare pensions?
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Welcome to The Complete Pension Guide 2017!
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The first is charges and fees payable
The charges that are paid in a scheme are dependent on the provider and the type of scheme. You should get an idea of exactly how much you will be paying over the life of your investments. Many older schemes have exorbitant charges meaning people could benefit from moving to a pension with a more reasonable charging structure.
The second is investment performance
It is important to note that past performance is not a great indicator of future performance with funds. The best performer from the last 5 years will not be the best over the next 5. You can reasonably compare performance over the last 5 years with similar funds to see whether your pension has grown at a good rate.
The other thing to look at is the performance of fund managers. There are certain fund managers that are consistently growing their managed portfolios at impressive rates. These super fund managers are more likely to perform well in the next 5 years if they have in the past 5 years. Having said that certain attitudes to fund growth suit certain economic climates and this should be taken into account if you are looking at indicators of future fund growth.
The best performing pensions are those that have the best investment growth after factoring in the charges. In most cases you have to pay higher charges to get the best fund managers. It is therefore not always wise to base comparison on just charges, or just investment growth. A combined approach will serve you much better.