How can an advisor help me find the best pension company?

There is certainly no shortage of pension companies to choose from, and each one has its schemes, features, and benefits.

Knowing exactly where to start and which company offers the best value can be very confusing.

There are many comparison websites available to help you decide, but these websites don't know your circumstances, and they can't explain all the benefits and drawbacks in detail.

A financial advisor will advise you on the best scheme and pension company based on your circumstances and needs.

What is a pension company, and how do they work?

Aegon, Legal & General and Aviva are just some of the big companies associated with providing pension schemes, but what do they and other pension providers do? 

A pension company, or pension provider, is a commercial organisation that manages pensions, which may be either personal or workplace schemes.

These schemes can be either defined-contribution or defined-benefit schemes. A pension company could be an insurance company, bank or building society and may deal exclusively in pensions.

Each month, members of the pension scheme, as well as some employers, pay pension contributions to the pension company.

The pension company then invests the money on behalf of the members into the particular fund or funds that the member or employer has chosen. 

If, at the age of 55 or over, the member chooses to access their pension, the provider will offer them a range of income options.

Members of defined benefits (final salary) pension schemes may have to wait until they reach their scheme's 'normal retirement age', typically around 65.

What qualities does a good pension company have

If you're setting up a pension either for employees or yourself, taking financial advice is always recommended. Some of the things to consider with the help of your financial advisor are:

A good reputation

The Pensions Regulator must approve your chosen provider. But you should also research its wider reputation.

You can search online for member reviews, but your financial advisor should know much more and will also be able to offer an expert view on the main pros and cons of each provider, as well as how well-matched they might be to your requirements.

A range of funds

Look for a company that offers the investment options you're seeking. Usually, a company with many options is a good choice.

This gives you more choices based on your goals and risk tolerance. One option that many people seek is a dynamically managed fund which allows you to adjust your asset allocation according to how close you are to retirement. This may sound complicated, but your advisor can provide you with more information.

Contributions 

Affordability is always important, so consider the minimum and maximum levels of contributions allowed and ensure you can afford the minimum contribution.

You should also ensure that you can increase your payments and inquire about the option to pay in lump sums in addition to regular contributions if desired.

 

Fees

 

Most pension providers charge a flat fee or a percentage of the pension pot's value as an annual administration fee for managing your fund.

They must disclose the cost to you before signing up, and remember that paying fees over a long period can add up and reduce your overall savings. So, pick a scheme with a fair price that you are comfortable with.

You should also inquire about any hidden fees that may be charged, such as underlying fund fees, entry, exit, or transfer fees, as well as inactivity fees.

Investment options 

Sometimes, schemes have a default fund. It's usually better to use a provider that allows you to choose the funds to invest in, and you can work with your financial advisor to select the right funds and investments tailored to your needs.

Additional benefits

Usually, pension schemes offer additional benefits. These may include death in service, ill health, retirement, and tax-free lump sum withdrawals. 

Penalties and tax implications 

Establish with your provider what, if any, potential penalties there could be on your scheme. For example, what happens if you ever need transfer your pension pot to another provider or pause your contributions.

Get expert advice

Making the right pension choices is particularly important, but it may seem complicated and daunting to many. However, seeking professional advice from a qualified advisor can help you make an informed decision.

A financial advisor will take the time to advise you on the best pension company and scheme based on your needs, aspirations and, of course, budget.

Once you've agreed on the most suitable option, they will review your pension regularly, ensuring your retirement savings are on the right track. 

Let Regulated Advice match you with a financial advisor for expert advice.