Things to remember when choosing a personal pension scheme
Choosing a personal pension scheme is an important financial decision and there are many things to consider:
- Before you decide to take out a personal pension, compare the costs you will have to pay with the costs of a stakeholder pension. And make sure the personal pension you choose is the right one for you because you may have to pay extra charges if you decide to transfer to a different type of scheme
- What are the rules on making contributions? – For example, can you change the amount you contribute if your circumstances change?
- How much can you save and is the pension scheme ‘contracted out’ of the additional State Pension?
- How will the money be invested?
- How much does the pension provider charge you for setting up your pension and for administration? Remember that high administration costs don't necessarily mean it's a good pension
Because of all these things, it’s a good idea to shop around and do some research. One place to start is the Financial Services Authority (FSA), which publishes lists of all the pension providers it authorises, as well as providing tables that compare different pension schemes.
You could also contact the Pensions Advisory Service for more information about personal pensions, or pay an independent financial adviser (IFA) to help you choose a suitable personal pension.
Phone The Pensions Advisory Service on 0845 601 2923
Lines are open Monday to Friday 9.00am to 5.00pm. Calls are charged at
local rates
Find out more on The Pensions Advisory Service website
Phone the FSA consumer helpline for information about personal pensions,
authorised providers and annuities on
0845 606 1234
Textphone: 0845 730 0204
To find an Independent Financial
Adviser near you visit the IFA Promotion website
As with any other financial or contractual agreement you make, it is important to carefully consider the advice you are given. Always read the small print before you sign or agree to anything.
Group personal pensions
Some employers may arrange for a pension provider to offer their employees a personal pension instead of an occupational pension. Personal pensions arranged in this way are called 'group personal pensions'. Find out if your employer has made this arrangement and if it is suitable for you.
Although they are sometimes referred to as company pensions, they are not run by employers and should not be confused with occupational pensions.
There are two important advantages of group personal pensions over individual personal pensions.
1. Because they are often organised by an employer, it is more likely that your employer will also pay into the group scheme on your behalf than if you took out a personal pension by yourself.
2. Your employer may have been able to negotiate special conditions such as reduced charges with the provider.
But if you leave your employer, it is likely that they will stop paying into your pension scheme. What’s more, you may lose any special terms that your employer has negotiated for the group scheme. Find out as much as you can from your employer before you join or leave – and contact the pension scheme provider to find out what your options are.
Read or print Personal pensions and Stakeholder pensions – Your guide (PM4)
If you are self employed, read or print Pensions for the self-employed – Your guide (PM5)