Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

the best private pension

What is the Best Private Pension in 2018?

As UK life expectancy rises, people are spending more time than ever in retirement and their retirement income has to stretch much further. So it’s never been more important to find the best pension on the market to see you through your old age.

There is so much to consider from the type of pension, it’s cost to run, how much you should be saving and which investments you should be choosing. So how do you find the right personal pension for you?

Neil Adams
Head of Pension Planning at Drewberry

Although all employers will soon have to provide workplace pensions to most employees under auto-enrolment, there is still often a real case to make personal arrangements and set up your own private pension. For all those people who are self employed or contracting there is no alternative but to make your own arrangements.

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Personal Pensions Explained

Private pensions are a type of defined contribution pension scheme. They’re essentially big pots of money that you pay into during your working life, which you then use to provide yourself with a retirement income.

There are two main types of pension plan to consider when setting up a private pension: a stakeholder pension and, for the more experienced investor with a larger pension pot, self-invested personal pensions (SIPPs).

 

Personal Stakeholder Pensions

A stakeholder pension allows for flexibility when it comes to the size and regularity of contributions. Stakeholder pension providers also tend to cap charges and, if you’re unsure about the investments you’d like to make, offer a ‘default’ fund that’s designed to suit as many people as possible.

 

Self-Invested Personal Pensions

A self-invested personal pension, on the other hand, offers much more freedom and flexibility when it comes to managing your investments. With a SIPP, you or your investment manager is free to manage the funds as you see fit to achieve the kind of returns you’re looking for.

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Which is the Best Private Pension?

Finding the right private pension requires careful consideration. After all, you’ll hopefully have a long and happy retirement, but you’ll need to fund that somehow. Achieving your financial goals for post-work life is possible, but it requires you to lay the groundwork today with good pension planning.

It’s here that the help of a financial adviser can be invaluable. There are a huge array of options available if you’re starting your own pension, which makes it hard to know if one provider offers a better personal pension than the rest.

You’ll also have to consider your investment choices and possibly commit to managing them. Again, this is an area where a pensions adviser can be of huge assistance, especially for a new investor or someone with limited time to dedicate to their pension investments.

Drewberry's team of pensions advisers can help you set up a new personal pension

Remember, everyone’s pension requirements are different. Just because one option works out to be the best pension for a friend, family member or colleague doesn’t mean that same personal pension will automatically suit your needs.

There may well be better personal pensions out there on the market for you, which our expert pension advisers can help you search for.

Tom Conner
Director at Drewberry

Compare top pension providers

Compare Best UK Pension Providers

Below is a list of some of the top investment management firms whose funds Drewberry makes use of when building pension portfolios. This list is pulled from our own research, but there are many other providers available out there in the wider market.

AJ Bell

AJ Bell

AJ Bell was founded in 1995. As well as SIPPs, AJ Bell is also an award-winning provider of ISAs and dealing accounts. The AJ Bell Youinvest SIPP is the company’s execution-only, low-cost variant of a personal pension. Also available

  • No set-up fee on the AJ Bell Youinvest SIPP
  • Annual manage charge on shares: 0.25% (capped at £25 per quarter)
  • Charges on the first £250,000 of funds (e.g. unit trusts, OEICs etc.): 0.25%.
Alliance Trust Savings

Alliance Trust Savings

Alliance Trust was founded in 1890 and provides full SIPPs, as well as ISAs and investment dealing accounts.

  • Alliance Trust SIPP charges are £17.50 a month (+ VAT) while you’re still saving
  • A supplementary account charge or £375 a year (+VAT) also applies.
  • These charges buy you four free online trade per year; dealing fees apply after you exhaust those four trades.
Bestinvest

Bestinvest

Bestinvest was founded in 1986. It provides execution-only investment services as part of the Tilney Group, including a low-cost SIPP.

  • No set-up fees on the Bestinvest SIPP
  • Tiered annual management charges:
    – 0.3% on the first £250,000
    – 0.2% on funds of £250,000-£1 million
    – No charges on funds of over £1 million.
  • No service fees if you invest in one of Bestinvest’s readymade portfolios.
charles stanley direct

Charles Stanley

Charles Stanley Direct is part of the Charles Stanley Group, which was established in 1792, making it one of the oldest firms on the London Stock Exchange.

  • Charles Stanley’s SIPP is free to set up
  • Annual management charge: £100 (+VAT) (waived if you have more than £30,000 in assets invested across Charles Stanley’s platforms)
  • Platform fee on the Charles Stanley SIPP: 0.25% (subject to a minimum fee of £24 and capped at £240).
Fidelity pension funds

Fidelity

Fidelity International was founded in 1969 as the international arm of Fidelity Investments, a financial services corporation based in Boston, Massachusetts. It became independent from Fidelity Investments in 1980.

Fidelity’s SIPP is a low-cost variant that charges a combination of percentage and flat-rate annual service fees depending on your investments.

  • Investments of below £7,500 carry an annual service fee of £45 if you don’t have a regular savings plan or 0.35% if you do.
  • Between £7,500 and £250,000 Fidelity charges 0.35%
  • For investments of between £250,000 and £1 million the fee is 0.2%.
  • No further service fee is levied on assets above £1 million.
hargreaves lansdown

Hargreaves Lansdown

Based in Bristol, Hargreaves Lansdown was founded in 1981. It offers ISAs, pensions, investments, financial advice and share dealing services.

  • Hargreaves Lansdown Vantage SIPPs are free to set up
  • Carry a tiered fee structure of:
    – 0.45% on the first £250,000
    – 0.25% on portfolios of between £250,000 and £1 million
    – 0.1% on portfolios worth between £1 million and £2 million
    – No fee for portfolios worth over £2 million.
Nutmeg Investments

Nutmeg

Nutmeg is a London-based online investment management company founded in 2011. Nutmeg works by learning about you and, once it has enough information, builds and manages a pension portfolio on your behalf.

  • Nutmeg personal pensions are free to set up
  • No trading or transaction fees.
  • Fully managed portfolio fees:
    – 0.75% on the first £100,000
    – 0.35% on everything above £100,000
    – Underlying charges also apply – see Nutmeg’s fees page for details

rowanmoor

Rowanmoor

Rowanmoor is the UK’s largest independent small self-administered scheme (SSAS) provider and a provider of bespoke self-invested personal pensions (SIPPs).

  • Setup fees for Rowanmoor’s SIPP are £300 for the full investment option and £100 for the single investment option.
  • Annual administration fees are £495 for the full investment option and £250 for the single investment option.
  • To ensure fees are paid in a timely manner, Rowanmoor requires you to hold at least £2,000 in cash, or other easily realisable assets, to meet any liabilities.
Standard Life Aberdeen

Standard Life

Standard Life – known as Standard Life Aberdeen since March 2017 – is a Scottish investment company headquartered in Edinburgh. In March 2017, Standard Life agreed to merge with the investment company Aberdeen Asset Management and became Standard Life Aberdeen.

  • The Standard Life SIPP is free to set up.
  • Administration charges vary depending on the level of investments you choose to adopt.
ben sassoon, pensions & investments expert at drewberry

The above table is a list of top UK SIPP providers; others are available in the market. Also available on the market are stakeholder pensions, a lower-cost alternative to SIPPs. The best UK pension provider for you will depend on your individual needs and circumstances. That’s where the value of pensions advice comes in.

Ben Sassoon
Pensions & Investments Expert at Drewberry

 

Pension Pot Calculator

How much will your pension be worth when you retire? And how long will that pension last if you choose income drawdown? Use our Pension Calculator to work it out and receive our FREE Guide to a Richer Retirement.
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Your Pension Contribution Results

Using our expertise we've modelled how much your pension could be worth at retirement given how much you're currently paying in and the age at which you've indicated you'd like to retire. Assuming your current contributions remain fixed between now and your retirement, we've put together three estimations of the size of your pension pot on that date based on low growth (2%), average growth (4%) and high growth (6%) scenarios.

Expected Retirement Age
2% Growth Rate
4% Growth Rate
6% Growth Rate

How Long Will My Pension Last?

Now you know how much your pension fund may be worth, how long will it actually last in retirement? Answer the questions below and we'll do some clever calculations based on government projections of your life expectancy to work out the monthly income you could draw down from your pension.

Your pension pot at retirement

So far we've projected three pension pot sizes for you at retirement based on your contributions and three different growth rates.

At retirement, you're allowed to withdraw up to 25% of your pension tax-free.

You've chosen to take more than 25% of your pension pot upfront as a cash lump sum. Only the first 25% of your pension pot can be withdrawn this way tax-free. Anything above the initial 25% will be subject to income tax at your highest marginal rate.

Enter the income you would require in today's money. We will inflation proof your income in this calculation so it maintains the same purchasing power at retirement as it has today.

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Your Income Drawdown Results

Given the income you'd like to receive, we've used our financial expertise to calculate how long your pension will last. With income drawdown your pension pot remains invested after you retire, so we've projected how long your pension will last based on your fund growing post-retirement by 2%, 4% or 6%.

Required monthly income
*
2% Growth Rate
4% Growth Rate
6% Growth Rate
*The inflation proofed income you will require when you reach your retirement
You've saved hard into your pension pot your whole life, so it's essential you make the right choices at retirement and don't deplete your fund too soon. If you're considering income drawdown, it's very important you speak to an expert pension adviser. Please do not hesitate to call us on 02084327334.
Neil Adams - Final Salary Pension Expert

These calculators help but sometimes it doesn't beat talking to a human. If you need any support please do not hesitate to pop us a call on 02084327334.

Neil Adams
Head of Pensions Advice at Drewberry

IMPORTANT NOTES

This calculator is for illustrative purposes only. It is designed to provide an estimate of the size of your pension fund at retirement based on your current contributions and assumptions we've made about investment growth but is not a guarantee. Please note that this calculator does not constitute financial or other professional advice.

The growth rates indicated are only rough projections of how your fund could grow. As with any investment, your pension pot could rise as well as fall in line with market performance.

This calculator also provides an estimate of how long your pension could last in income drawdown but is meant only as a helpful projection, not financial advice. Income drawdown is just one option open to you for providing a retirement income and may not be right for everyone. You should consult a regulated financial adviser for individual retirement planning services or contact us for pensions advice on 02084327334 before making any decisions.

 

How Much Does a Private Pension Cost?

There are a number of different options you’ll have to consider to ensure you find the best pension for your needs and circumstances. There’s no shortage of pension funds available on the market, either, so if you’re going it alone you’ll need to do a lot of shopping around to compare pension schemes.

Make sure you compare the fees pension providers charge for any funds you’re interested in. Not only might you have to pay fees for managing your investments – known as annual management charges or AMCs – but there may also be charges for transferring your investments, as well as other fees. Any pension fees you pay will affect the overall pension you receive when you retire.

Can you afford your personal pension contributions?

Although it’s important to build up a good pot of pension savings to see you through retirement, ultimately your pension payments must be affordable during your working life.

Make sure private pension contributions are affordable

Some pension funds may impose a minimum contribution at regular intervals, which might not be suitable if your income is irregular, such as if you’re self-employed.

On the flipside, if you’re fortunate enough to come into some extra cash you might want to contribute a lump sum to your pension. It’s vital to find out whether your personal pension allows lump sum contributions as well as regular payments for additional flexibility.

Use the Pension Pot Calculator below to work out how much your pension could be worth given it’s current size and your current contributions. It’s important to make sure you’re saving enough for retirement, but don’t forget that any pension payments you make need to also be affordable for your circumstances.

Jonathan Cooper
Senior Paraplanner at Drewberry

Rauri was easy to talk to. Explained everything really well. Took prompt action when requested and was in touch when he said he would be without being pushy.

Robert Eldridge
07/06/2018
 

What are the Best Investments for My Pension?

The biggest thing to consider when it comes to setting up a pension is your range of investment choices. It’s important that you pick a pension fund that matches with your objectives and offers a degree of investment risk you’re happy with.

When investing your pension pot/choosing a pension fund, these are some of the options you might want to consider:

  • How do you feel about investing your pension in emerging markets?
  • Would you prefer to invest in mostly UK equities or also include investments on foreign stock exchanges? And, if so, what should the balance be between the two?
  • How safe do you want to play it with your pension investments – do you want to hold some in cash and take on inflation risk? If so, how much?
  • When it comes to risk, what’s your overall risk appetite? Would you like to aim for investments with high growth potential but at the risk your pension fund might make a loss, or would you prefer safer investments with lower prospects for returns?
  • Does investing your pension fund in commercial property appeal to you?
An expert pensions adviser is well-placed to help you with the multiple decisions you'll have to make when setting up a pension

While you might be able to stick with the default fund in a stakeholder pension if you’re unsure or new to investing, this might close off some of the avenues available to you and therefore limit your returns.

If you have a larger pension fund you are likely to be better served with a SIPP, but if you’re not comfortable with making your own investment decisions, then setting up a SIPP is problematic.

Expert pensions and investment adviser Neil Adams can offer you financial advice and wealth management services

With so many investment options available when you’re setting up a new personal pension, it makes sense to entrust the process to an expert adviser whose job focuses on investment management every day.

We’re well-placed to discuss your needs and marry them with your appetite for risk to ensure you put your money into a pension fund that works for you.

Neil Adams
Pensions and Investment Specialist at Drewberry

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Avoid Pension Scams

Avoid pension scams and keep your savings safeSadly, the wealth people work so hard to build in their pension funds makes them tempting targets for fraudsters and thieves. There’s even a risk that you might become a victim when setting up your first pension fund.

So just how do you avoid pension investment scams? Below is a checklist to follow that could help you avoid scams and invest your retirement savings safely and securely.

If it sounds too good to be true, it probably is

It’s natural when searching for the best private pension that we look for the highest promised returns, but these can sometimes be fake opportunities.

The FCA's register contains a list of all authorised financial services firmsWell-known unregulated investment scams are often overseas and might involve foreign hotels, vineyards or other construction projects.

While there are plenty of legitimate overseas investments, and if you’re happier to take a higher degree of risk there are perfectly genuine high-risk pension investments you could make, always be wary of such opportunities and do your homework to make sure you know what you’re getting into.

You should take advice on all investments from a regulated financial adviser, but this is especially true for investments promising big returns as these are probably carrying a high degree of risk.

A genuine, registered financial adviser should lay out the risks of investing your money in these areas rather than simply promising huge rewards for doing so.

Check the FCA register

The Financial Conduct Authority’s Financial Services Register is totally free to use and is fully searchable, so you can discover if the company you’re thinking of investing with is authorised/registered by the Prudential Regulation Authority (PRA) and/or the FCA to conduct financial business in the UK.

The register has recently been updated to include firms reported as providing regulated products or services without the correct authorisation, as well as those known to be running scams. A search for such a company will throw up its entry on the register with prominent warnings totally clear.

Don’t be rushed

Deciding on a private pension is a big decision. You’re choosing one of the investment vehicles that will see you through your old age. Take as much time as you need to find the right pension for you.

Never rush into pension investments. Take your time and talk things through with a financial adviser

Unscrupulous firms will use high-pressure sales techniques, such as offering tempting investment opportunities for only a short space of time.

Don’t allow yourself to be swept along with such tactics.

Some fraudsters won’t let you call them back at a later date, perhaps because they have no inbound telephone service. That should arouse immediate suspicion.

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How financial advice can improve your pension

Do You Get a Better Pension with Financial Advice?

When it comes to pensions, investments and wealth management, getting professional financial advice really can pay for itself.

That’s not just financially in the form of higher returns, but also in terms of the peace of mind you get from knowing your investments and ultimately future security are in the hands of an experienced professional.

While there’s nothing wrong with managing your pensions and investments yourself, the reality is that doing so – and doing it well – takes up a lot of time, time that most of us simply don’t have to spend.

Financial advisers can manage your pension

Once you’ve engaged a pensions financial advisor, you can sit down with them at regular intervals to discuss your investments, their performance, and whether your pension investments still suit your needs.

That way, your pension fund can stay abreast of changes in the markets even without your constant oversight, minimising the risk of poor performance.

As a result, and as illustrated by the graphic below, paying a fee for financial advice can make you 50% richer than those who don’t.

 

Does Financial Advice make a difference?

People who receive financial advice tend to end up wealthier than those who don’t. Numerous studies have found that individuals who take regular financial advice over the course of their adult lives end up substantially better off than those who don’t.
 

No Goals & No Financial Advice

moped retirement - no financial advice
£18,138

This is the annual income an individual approaching retirement can expect if they have no financial targets and have not received any professional financial advice.

 

Financial Advice without Goals

car retirement - financial advice
+36%
£24,794

This is the annual income an individual approaching retirement can expect if they have taken the time to consult a financial adviser about their retirement.

 

Financial Advice
with Goals

boat retirement - financial advice with goals
+53%
£27,736

This is the annual income an individual approaching retirement can expect if they have consulted a financial adviser and set clear retirement goals.

Morningstar logo

SOURCE: Morningstar 2013 Study
A 2013 US study by Morningstar found that financial planning advice can add almost a third to the value of retirement wealth.

Old Mutual logo

SOURCE: Redefining Retirement Survey
The Old Mutual Redefining Retirement Survey 2015 found that the average retirement income for those that took regular financial advice and who had a clear investment target was more than 50% higher than the average income for those who did not take regular advice.

Looking for the best pension advice?

If you’re looking for pensions and investments advice, Drewberry’s expert advisers are here to help. The value of using a financial adviser to set up your pension really can’t be underestimated when it comes to finding the best personal pension for your needs.

Peter Banks
Wealth and Investments Specialist at Drewberry

Please do not hesitate to pop us a call on 02084327333 to discuss your pension requirements. Alternatively, you can drop us an email at wealth@drewberry.co.uk.

Are You Pension Happy?
Call us on 02084327334
I know how much my pension is worth
I know how much my pension costs
I have clear financial goals for my retirement
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Capital is at risk. As with any investment, the value of your pension fund could fall as well as rise, meaning you could get back less than you paid in. Tax treatment varies according to individual circumstances and is subject to change.