You would be forgiven for believing that it is easy to get good pension advice online. After all, there are millions of words on the internet dedicated to helping UK citizens get the very best pension for their individual circumstances. The problem is, only a small percentage of the information you see online is written by independent experts in the field. Watch out for biased pension advice which is created on behalf of certain companies in a bid to attract new clients.
One of the simplest pieces of pension advice you will ever receive relates to seeking a meeting with an Independent Financial Advisor (IFA). Many people baulk at the idea of seeking professional advice because of the cost. First of all, IFAs are not that expensive and secondly, their expertise is likely to save you several thousand pounds by the time you reach retirement. IFAs are legally required to give you the best advice and must produce a letter explaining why they made a particular recommendation. Nonetheless, you must be careful because if you buy directly from a pension provider or use an execution only option, you will not gain compensation for losses incurred after getting bad advice. This is because the final decision to invest in a pension scheme is deemed to have been made by you.
Another key facet of useful pension advice involves the types of schemes on offer. Occupational pension schemes are organised by an employer for employees of the company. These are considered the best because of the huge array of benefits on offer including generous tax relief and employer contributions. If your company does not provide a pension or you are self-employed, a personal pension is your next best option. Stakeholder personal pensions tend to be flexible and have relatively low fees and charges. When seeking pension advice, it’s best to keep things simple and avoid looking at complicated pension options. In general, the more complicated a scheme is, the more you stand to lose.
Simple Pension Advice
The best pension advice is information you can understand. For example, it should be obvious that shopping around is vital as this one of the largest and most important financial decisions you will ever make. Again, using the services of an IFA is an essential requirement. Always pay close attention to information on charges and flexibility and never forget to be realistic when it comes to deciding how much to save. You should also factor in your state pension when calculating the amount of money you’ll need to have a comfortable life after retirement.
Another critical piece of pension advice is to carefully analyse the past performance of any pension scheme you have your eye on. It’s important to note that this analysis needs to go beyond merely looking at a fund’s investment growth. Performance is supposed to be dictated by the skills of fund managers.
Oftentimes, it doesn’t work out this way as they simply rely on financial markets and stock performing well. However, there will be cases when the talents of a fund manager dictate fund performance. It is possible that the person responsible for excellent past performance has moved on and no longer works for that company. Therefore, you need to find out how long the fund management team has been working for that company. Of course, you should never assume that great performance in the past will translate into future success.
In conclusion, don’t have the attitude of taking pension advice where you can get it. The quality of the advice received is far more important than the quantity. Never cut corners when the future of you and your loved ones is at stake.
This article has been written in good faith. It is believed to be accurate at the time of writing and is for information only.