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Quality free advice on your pension

Neil Faulkner
by Lovemoney Staff Neil Faulkner on 27 November 2011  |  Comments 2 comments

This small, under-appreciated voluntary organisation can offer great advice on your pension planning and complaints.

Quality free advice on your pension

During an interview with pensions minister Steve Webb, Ros Altmann, currently director of Saga, recommended the free, independent Pensions Advisory Service, saying “They do a fantastic job”.

Altmann has been an excellent and outspoken campaigner on pensions for a long time and she has a shrewd understanding about how they work, and in particular how government tinkering affects them. She is very definitely on the people's side, so, when she recommends something, it's worth looking into.

Which is what I did.

Ask your questions

The Pensions Advisory Service can't give personalised, tailored advice. By a technical definition, then, it doesn't give “advice” as far as a financial advisor would describe it. However, it can answer an awful lot of questions that can allow you to piece it together for yourself.

You can ask it to help explain the different types of pension, from the State Pension to company and personal pensions, including stakeholder pensions.

It can explain the latest on contracting out, on making voluntary National Insurance contributions to increase your State Pension, on the new scheme that will auto-enrol employees into a pension, and about pension credits. It can talk about women and pensions or the self-employed. It can answer questions about your options after retirement, from annuities to income drawdown.

You can ask questions by phone, email or live online.

Whose side is it on?

It seems clear the service is on our side, not the industry's. It seems to understand important issues that the pensions industry itself isn't keen on talking about, and doesn't shy away from them.

I'll give you one example. Just recently it gave a prominent position on its home page to a story about £3bn in hidden pension charges due to “frenetic trading”. Rapid trading is one of the largest costs to pension holders and it has extraordinarily massive negative effects on the size of your retirement income.

If this organisation was on the pension providers' side, it would have written nothing about this, or it would have tried to vigorously defend the trading costs.

Help with complaints

If you have tried to complain to a pension provider and failed, you can ask the Pensions Advisory Service for assistance. Professional, volunteer pension advisers will then try and resolve the dispute through mediation if they think your complaint is justified. They will recommend to you what further action you should take. All for free.

You can also go to the free Pensions Ombudsman with your complaints, but you can't then use the Pensions Advisory Service afterwards, so consider the order you do this in.

Unfortunately, the service can't help with complaints about investment decisions or the State Pension.

Useful online tools

The service has some great online calculators, including an excellent retirement planner to check if you're on track to retire with an appropriate pension pot. Having never seen such a tool before, this pretty much replaces all the hard work and effort I put into my four-stage guide to retirement a few years ago, which I wrote because I was astounded no professionals had done the same, or even tried to think of it from the point of view of how much income you might actually need in retirement.

Where else can you turn for free tips?

You can always get even more opinions from users of lovemoney.com through Q&A. Be sure to check out our Get ready to retire and Start a pension guides.

Have you ever used the Pensions Advisory Service? How was your experience? Would you ever use a service like this? Let us know in the comment box below.

More: compare savings accounts through lovemoney.com | Which savings account should you get? | The five biggest pension mistakes

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Comments (2)

  • BGM
    Love rating 6
    BGM said

    there must surely be a site or something that can give me some no-nonsense info about which funds to put my pension into..

    i've been trying to figure it out for well over 3 months now :s

    Report on 27 November 2011  |  Love thisLove  0 loves
  • Neil Faulkner
    Love rating 32
    Neil Faulkner said

    Hi BGM

    Look to Alliance Trust and Fidelity for pension funds called trackers/index trackers. Pay into these sorts of funds regularly and consistently, ignoring the financial media, doomsayers and bubble enthusiasm (whenever it returns) and you're on the low cost route to beating the vast majority of managed funds and most other pension savers over the long-term.

    You want low costs because higher costs normally just turn into lower returns; in investment funds, you don't get what you pay for!

    Alliance Trust provides a pension with access to Vanguard's index trackers, which are the cheapest index trackers available. Fidelity's pension is also a good one to consider, because, although it doesn't have Vanguard funds, it has a great many more index trackers to choose from.

    The warning is that there are some changes afoot that might cause both pension providers to change their charging structure for the worst, but we can't predict that.

    You can read more on index trackers here:

    http://www.lovemoney.com/news/the-economy-politics-and-your-job/the-economy/4666/two-simple-ways-to-invest-better-in-shares

    http://www.lovemoney.com/news/savings-investments-pensions/index-trackers/10173/six-great-reasons-to-choose-an-index-tracker

    http://www.lovemoney.com/news/the-economy-politics-and-your-job/the-economy/4508/the-four-biggest-index-tracker-mistakes

    http://www.lovemoney.com/news/savings-investments-pensions/isas/4426/three-cheap-index-trackers

    You could also look through the investments and pensions archive here

    http://www.lovemoney.com/news/archive

    Or type "index tracker" in the lovemoney search for more.

    Bear in mind that beating the majority of fund managers does not necessarily mean you'll beat inflation even in the long run, although there's a vast amount of data and logic that says paying in regularly for long enough and you should expect to do so. This is far less likely with most other investment types, such as bonds.

    The best research available on investing (from Triumph of the Optimists -- three professors from London Business School) found that spreading your money into 8 different countries (so eight different index trackers) further reduces the risk of losing to inflation over a longer period by a considerable amount. Perhaps a mix of trackers tracking developed and emerging markets would be a good idea.

    If you want to keep some of your money even safer, albeit with lower potential for bigger gains, look for inflation-linked savings accounts that match or beat inflation after tax. There are usually one or two on offer at a given point in time.

    Finally, if you're not totally fed up with all this, look into the pros and cons of using ISAs as well/instead of pensions for your investments. You can put all the same trackers into share ISAs, but ISAs are a more flexible low-tax wrapper than pensions.

    Neil

    Report on 30 November 2011  |  Love thisLove  0 loves

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