Four pension firms make best-buy grade

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The Independent Online
A BEST-BUY list of pension providers has been produced by the actuaries Bacon & Woodrow after extensive weeding-out of providers that do not come up to scratch.

The survey covers only unit-linked plans as Bacon & Woodrow no longer recommends with-profits policies to private clients.

Different pension companies are best for different needs, depending on factors such as the investor's age and the size of the investment.

But just four names make the grade - Rothschild Asset Management, Standard Life, National Mutual and Scottish Widows.

The companies had to pass several screenings to reach the shortlist. The first analysis looked at investment performance of managed funds over the past five years. Those that scored below the mid-point were excluded.

These included Aetna Life, Henderson, Eagle Star, Provident Life, Prudential, Life Association of Scotland and Windsor Life, leaving 52 funds in the running.

The performance was then examined to judge consistency. Only those who were in the top half of the performance tables at least half the time, and in the bottom quarter less than a quarter of the time, passed this test. The failures here included Allied Dunbar, Commercial Union, Equitable Life, Friends Provident, Hill Samuel, M&G and Pearl.

After this 27 funds remained. Acuma Life and Cannon were then excluded because of their worsening investment performances.

The charging structure was the next aspect to be put in the spotlight. Failures here included those who levy a penalty on investors who transfer their funds elsewhere or retire early - Colonial Mutual, Equity & Law, Scottish Amicable and Scottish Equitable.

Bacon & Woodrow also looked at the financial strength of the pension providers on the shortlist. Companies that also issue with-profits policies could have a problem, but those that only do unit-linked business such as Rothschild have no problems on this score because all the risk is in effect passed on to the policyholders.

The shortlist also underwent an examination of their administration. 'Administration of personal pensions has improved in recent years,' the report said.

National Mutual came out as the first choice for all rebate-only pensions, while other recommendations varied according to the number of years left to retirement and the amount invested.

Previously, Bacon & Woodrow had shortlisted policies from Sun Life, Irish Life and Confederation Life. 'For clients who have existing policies with one of these companies we would not automatically recommend a transfer to one of the new shortlisted companies, but advice would be given on an individual basis,' said Andrew Warwick-Thompson, Bacon & Woodrow's head of partnership pensions, who is responsible for the survey.

'The analysis of charges is based upon the nil-commission terms offered to Bacon & Woodrow. These are likely to be better than the terms offered to other advisers.

'This makes the Bacon & Woodrow survey very different from other surveys, which are based on standard contracts.'

Individuals can get nil-commision terms by going via a fee-charging adviser. Large pensions advisers such as Bacon & Woodrow may get better terms than smaller firms. So the cheapest fee may not provide the best deal.

----------------------------------------------------------------- Table: BEST-BUY PERSONAL PENSIONS ----------------------------------------------------------------- Years to retirement First Second ----------------------------------------------------------------- Recurring Single Premiums - pounds 1,000 a year 0-7 Rothschild Standard Life 8-10 Rothschild National Mutual 11-16 National Mutual Rothschild 17-40 National Mutual Standard Life ----------------------------------------------------------------- Transfer Payments - pounds 10,000 0-1 Standard Life Rothschild 2-3 Scottish Widows Standard Life 4-7 Scottish Widows National Mutual 8-40 National Mutual Scottish Widows ----------------------------------------------------------------- Regular monthly premiums - pounds 50pm (increasing with national average earnings) 0-7 Rothschild Standard Life 8-20 Rothschild National Mutual 21-40 National Mutual Standard Life -----------------------------------------------------------------

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