Personal Pension Schemes

6. Getting Advice

Always shop around and compare investment performance and charges before you commit your money. Obtain professional advice.

Your employer may be willing to pay for advice. Pensions advice to any annual value of up to £150 can now be offered as a tax-free benefit, provided it is made available to all employees.

6.1 Many organisations sell personal pension plans, including unit trust companies, banks and building societies, life assurance companies and professional advisers.

• A company's agent or sales person will recommend plans from the company's own portfolio or that of partner providers', which they believe to be suitable. Independent financial advisers will search a variety of providers and recommend a plan which they believe to be suitable.
• Some will receive a commission if you buy from them, while others will charge a fee.
• Check with the Financial Services Authority that the company or adviser is regulated under the Financial Services Act (0845 606 1234).

6.2 The adviser must complete a 'fact find' to ensure your needs are met.

• You will be asked questions about your income, investment aims, marital status and financial commitments.

6.3 The adviser must provide you with specific details about the recommended plan:

• An illustration (not guaranteed) of the value of your pension on retirement. This shows what might happen if your fund grew at 3, 5 or 7 per cent a year.
• An illustration of what those figures could mean in present day money, after allowing for inflation.
• Details of charges and how they will reduce investment performance, assuming a set rate of investment growth.
• How much the total charges would amount to over the full-term of the policy.
• How much commission the adviser earns.