Savings schemes in step with young swingers

If you were to ask those twenty and thirtysomethings without a pension why they haven't started one, they might say they can't afford it or are confused by the choice available. Inertia is another factor: according to research from Virgin Direct, out of the one in four workers who do not have a pension, 42 per cent simply haven't got round to it.

If you were to ask those twenty and thirtysomethings without a pension why they haven't started one, they might say they can't afford it or are confused by the choice available. Inertia is another factor: according to research from Virgin Direct, out of the one in four workers who do not have a pension, 42 per cent simply haven't got round to it.

If your employer does not offer an occupational scheme, it can be hard knowing which personal pension to choose. And the situation is set to get worse when stakeholder pensions are launched next April, even though they are supposed to simplify the process.

The argument for starting your pension as early as possible is that you will have longer to build up a big enough pot for a comfortable retirement. As the state pension will be practically worthless by the time those in their late twenties or thirties retire, we can't rely on it. We need to provide for ourselves.

The good news is that this is getting easier as more straightforward information becomes available. A number of websites have recently been launched - from Legal & General, Hargreaves Lansdown and Virgin Direct - that are dedicated to pensions.

The service from discount broker Hargreaves Lansdown is the most innovative. As well as a detailed pensions database that allows users to compare the charges, terms and performances of 30 companies from Equitable Life to Virgin, jargon-free explanations are available. Although the typeface is so small it can be hard to decipher, customers who persevere can also get good discounts if they apply online.

The site also offers a collective buying service. Customers who want a pension can register their interest online. HL then approaches a number of providers, asking them for a quote to provide each of those people with a pension. This is then relayed back to the buyers, who can decide whether they want to proceed. The terms are guaranteed, regardless of how many people decide to take out a pension. Each co-buying session should take around four weeks, with HL promising to keep buyers up-to-date with any developments during that period.

"Our service brings buyers together so they can get the best possible price from pension providers, allowing each individual to benefit from the economies of scale which would usually only be available to the largest corporations," says Adam Norris, managing director of Hargreaves Lansdown Pensions Direct.

One of the problems with offering pensions on the internet is that they can be difficult to understand, so any information needs to be clearly explained. Virgin Direct designed its new pensions site with the intention of being as straightforward as possible. Buyers can apply online although the entire process cannot be completed without an actual signature.

"Pensions legislation is quite strict on this," says Gordon Maw at Virgin Direct. "But with the stakeholder it will be different and, as [is the case] with individual savings accounts, a signature won't be required." So far, however, he doesn't feel this restriction has hindered the take-up of pensions online, which now account for 20 per cent of Virgin's pensions business.

"People like to do everything online - they want to get through the process quickly," he adds. "They want that satisfying feeling of getting through and pressing the 'submit' button. There's nothing more frustrating than all of a sudden realising you aren't allowed to complete the form."

The problem with Virgin Direct's site is that you can't shop around and compare pensions. But if you have decided that you definitely want a Virgin pension, which carries a low annual management charge of 1 per cent, the site is useful.

Legal & General's online site - epension - offers pension information for both novices and those who know more about retirement planning. There is also an e-pension reckoner to help you work out how much you need to pay into a plan to retire on a comfortable income. A number of customers have taken out a pension entirely online, apart from actually signing the form. Mike Smith, business communications manager at Legal & General, believes that figure will soon multiply.

"When stakeholder arrives, we can simplify the regulatory process so people won't have to scroll through pages of key feature documents," he says. "The existing regulations mean people have to have these pages. But with stakeholder we will be able to answer a lot of key questions via decision trees, which lends itself well to the electronic format."

* Contacts: Hargreaves Lansdown, www.hlpensions.-co.uk; Legal & General, www.landg.com; Virgin, www.virginpension.com