Setting up a private pension fund sooner rather than later has long been the advice of financial experts. But with more and more businesses offering private pension services, which are the leading companies, and how do you distinguish between the options?
Starting a Private Pension Fund
Distinct from the public pension contributions or those offered by workplaces, personal pension funds are assets put into investments, like stocks and shares. Most workplaces now offer enrolment automatically into a pension fund. Choosing a private pension provider gives you a chance to consolidate your pensions together, making it easier to manage and track.
Tax is a significant consideration when looking into private pension investments. Regardless of which company you choose to invest with, any earnings on pension fund investments are tax-free. Also, income tax paid on money allocated to private pension contributions has a certain percentage of tax relief. Tax relief and allowance are, of course, limited and assessed on individual circumstances. Pension providers generally work best for self-employed individuals or those who don’t have a workplace pension or are working towards an early retirement goal.
Top Pension Providers
Depending on an individual’s circumstances, one pension provider may be more attractive than another. This can be due to the size of the pension pot, how active the pension contributor will be in investing, and employment status But who is the best pension provider in the UK? The top-performing pension providers include Prudential, Invesco, Phoenix, Moneyfarm, and Vanguard. It should be noted that each has pros and cons for particular circumstances.
For example, many opt for a company that offers ready made personal pension solutions and are suitable for anyone with no previous investment experience. This type of pension means that it is possible to contribute regularly monthly payments as well as lump sum payments. Ready made options are straightforward to manage, and the pensions company takes all tax relief. Moneyfarm, for example, offers a ready made personal pension service with a very low minimum contribution.
Assessing Personal Pension Providers
There are many pension providers in the UK and Ireland, so how do consumers assess each company’s services? The entire point of a private pension fund is to invest the maximum amount in the most profitable way possible. For this reason, the first consideration should be fees. Carefully assess administration fees, transfer fees, penalties, and management costs of each pensions provider, as this will, over time, make a massive difference to your bottom line.
The private pension provider should be registered with the appropriate financial and regulatory body. Who regulates pensions in the United Kingdom? The Pension regulator (TPR) regulates workplace pension schemes, and the Financial Conduct Authority (FCA) regulates private financial firms. This is an essential criteria for a company providing pensions funds to meet, protecting themselves and their customer’s money.
Before making a decision, it is always best to seek advice from a regulated financial adviser and do plenty of homework on each company.