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The best pension products and providers
By Jeff Salway
Over a year after the Government introduced a new set of rules for pensions, how we can save enough money to live on in retirement continues to be big news. In the last few months alone, more final salary schemes have closed, the Government has come under renewed pressure to help thousands of workers who lost their pensions when their companies went bust and details of a national pension scheme have been unveiled.
So why is pensions reform still such a big issue? It's simple: too few people are saving enough for retirement. According to the Office of National Statistics, the amount of disposable income that we're putting to one side is the lowest it's been since 1960. This is largely because employers are paying less into our pensions than they used to and rising costs such as energy bills have eroded the amount we can save.
A recent survey by National Savings & Investments found that only half of us save regularly, with the main reasons given for not saving being a lack of income and, more pertinently, because we "can't see the point". This is why a big feature of the National Pensions Saving Scheme, proposed for 2012, is auto-enrolment. If the accounts are introduced, employers will be obliged to enrol all workers into either their existing scheme or a personal accounts scheme. Under the scheme, workers would have to contribute 4% of their pay, the Government 1% in tax relief, while employers would pay in 3%.
While the opt-out element of the 2012 plans has been widely welcomed, others are sceptical. "Personal accounts will target those who have yet to make any private pension provision," says Nick McBreen, an IFA at Worldwide Financial Planning. "So it will inevitably be uninspiring and lead to significant numbers of people opting back out again pretty quickly, defeating the object of the exercise." This underlines that the only way to make sure you're on the right road to a comfortable retirement is to sort your pension out yourself. This isn't straightforward though - sorting the pension wheat from the chaff in what can seem a baffling overload of information is hard.
This is where the Moneywise Pension Awards 2007 come in - we recommend the companies that consistently offer the best products with the most efficient service and administration at the most reasonable costs. There's a big difference between the best and the worst providers, especially when it comes to the investment options available and the charges you have to pay, so making the right choices can give your retirement plans a massive boost.
Moneywise Pension Awards 2007
Best providers
Best personal pension provider (non-stakeholder)
Friends Provident
Commended: Skandia
Best stakeholder pension provider
Aegon Scottish Equitable
Commended: Clerical Medical
Best comprehensive self-invested personal pension provider
Standard Life
Commended: Suffolk Life
Best low-cost self-invested personal pension provider
SIPPCentre
Commended: Fundsnetwork
Best annuity provider
Prudential
Commended: Legal & General
Best performing funds within a pension
As we have seen, the range of funds available has become a bigger factor in pension choice. All of our shortlisted pension providers offered a wide range of funds and, crucially, this included a mix of their own funds and links to external funds, with a decent mix to suit different risk appetites.
The funds picked out here are the best and most consistent that can be accessed through more than one pension, although some were removed if their charges were considered too high. Pension funds still tend to favour the three managed sectors - active, balanced and cautious - but to ramp up the potential returns, these are increasingly supplemented by more ambitious sectors, including the specialist. Good funds in this sector can produce massive returns, so if you have an appetite for risk and have time on your side, they can give your eventual retirement income a real boost.
Top specialist fund
JPM Natural Resources
Pensions offering this fund: Skandia, AIG, Merchant Investors, Winterhur, AXA and Friends Provident
Commended: Invesco Perpetual Latin America
Top cautious managed fund
CF Midas Balanced Income
Pensions offering this fund: Skandia and AIG
Commended: Jupiter Merlin Income Portfolio
Top balanced managed fund
CF Midas Balanced Growth
Pensions offering this fund: Skandia and AIG
Commended: AXA Framlington Managed Balanced
Top active managed fund
M&G Managed Growth
Pensions offering this fund: Skandia, AIG and Prudential
Commended: New Star Active Portfolio
Judging panel
Caroline Anstee, director Elements IFA
David Marlow, director Alexander Forbes Financial Services
Nick McBreen, IFA Worldwide Financial Planning
Nicholas O'Shea, director Pharon IFA
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