Personal PensionFeb 19 2016

Personal pensions: Weighing options

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      Personal pensions: Weighing options

      Personal pensions are seeing tough times, especially since auto-enrolment has come into practice, giving savers another option in planning for their retirement. While auto-enrolment is a positive step forward in the pension landscape, advisers suggest an increasing number of clients prefer a company scheme where they receive employer contributions as well. In many instances, company schemes turn out to be cheaper.

      The increase in occupational pensions and the popularity of self-invested personal pensions (Sipps) have, according to some advisers, offered an alternative to clients. But while personal pensions may no longer be as popular as they once were, millions of pounds still sit in this type of scheme. And they do still attract some new funds, with some advisers believing personal pensions are here to stay.

      “If someone can afford to contribute more, they might be interested in setting up a personal pension, especially if they want to invest in specific areas such as ethical investments or emerging markets. Company schemes often have a limited choice of funds,” Rowena Griffiths, a chartered financial planner at London-based Female Financial Management, says. She further explains that those who like to make their own investment decisions and self-select stocks and shares or invest in commercial property, generally opt for Sipps.

      The data accumulated in this survey brings a number of trends to light. A few companies chose not to take part, including Friends Life and Aegon for the third consecutive year. Aviva took part last year, but did not send us a response this year, saying it does not have any products that it “actively markets”.

      One provider returning to this year’s survey was Scottish Widows, which did not take part last year. For all providers that did not respond to the survey, we referred to the with-profits data as shown in Form 59 on their annual PRA returns.

      As with any MM survey, it is sent out more than a month in advance of writing and two months before being sent to press, with extensions given where possible. We hope to see all companies back in the survey next year

      This year’s survey points to a continued decline in interest in with-profits. Table 1 shows results for with-profits personal pensions, after all charges, over five, 10, 15 and 20 years for regular contributions of £200pm gross for policies maturing on 1 January 2016. Performance data for firms that declined to complete the survey are as at 1 March 2015, and come from their most recent Form 59.

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