Beware the poor performers

PENSIONS

Picking the wrong personal pension scheme could leave investors with a retirement fund worth only half the amount paid out by some of the best performers, according to a new survey.

The difference between the best and worst funds can come to more than £170,000 on schemes where monthly contributions of £200 have been paid for 20 years.

The survey by Money Management, the financial magazine, covers with-profits funds, where a minimum sum is paid at maturity, plus annual bonuses that are "smoothed" to avoid volatility.

It also includes unit-linked and managed schemes, which are more closely linked to stock market movements.

In both cases, Money Management shows that some of Britain's best-known insurance companies deliver some of the worst results. Equally, some of the relatively unheard of companies produce consistently good performance.

Among the poor with-profits funds into which savers pay regular monthly premiums are Britannia Life, Guardian, Prudential, Royal Insurance and NPI. Eagle Star and Scottish Mutual figure among the worst for lump sum investments.

The top performers for regular contributions include Axa Equity & Law, Friends Provident, Pearl, Scottish Provident, Sun Life, Co-operative Insurance and Royal London. For one-off lump sum payments, Equitable Life, National Mutual Life and the small Wesleyan and General are among the best.

However, Janet Walford, Money Management's editor and author of the survey, said there are problems in trying to pick the best and worst funds on a catch-all basis, without taking individuals' needs into account: "Every client is unique and will require different benefits from their pension plans.

"Also, the service record and strength of a product provider play an important part in the final selection of a product. The best buys may well look different for other premium levels and for other end dates for performance." In this instance, performance relates to figures up to 1 December last year.

Ms Walford added that past performance was only one aspect of the equation, which must include fund management charges. "It has, however, been our experience that high-charging companies do not normally have great performance.

"This is because the higher charges are not spent on investment managers - they are spent on inefficient or greedy operators."

For with-profits funds, a saver who pays £200 a month for 20 years to Axa Equity & Law would expect to receive a lump sum of £347,017. Commercial Union would pay out £333,699, while Co-operative Insurance would deliver £322,699.

Norwich Union would pay £328,247 and Scottish Widows would deliver £339,455. The average return would be £289,852, an amount also beaten by Standard Life, National Mutual and Equitable Life.

In bottom place is Liverpool Victoria, whose savers could only expect £177,101. Royal Insurance would deliver £223,614 and Guardian Assurance £222,355.

In all cases, savers cannot simply receive the lump sum. They must usually use at least 75 per cent of it to buy an annuity, or annual retirement income.

Money Management singles out six companies as being among the best buys where unit-linked regular premium plans are concerned.

Unit-linked policies buy into pooled investment funds, which range across a vast range of different sectors. Different companies may perform better in one sector than another, making it more difficult to state how much cash is paid out, other than sector-by-sector or for managed funds.

This survey provides all these figures. It also picks out companies where at least 50 per cent of their funds have above-average performance.

The firms are Equitable Life, Norwich Union, Provident Life, Rothschild Asset Management and Scottish Amicable.

Lump sum premium contributions would get the best results from Axa Equity & Law, National Mutual, NPI Norwich Union and Sun Life.

Stephanie Spicer, assistant editor at Money Management, said: "Even with all these figures, it can be almost impossible to identify a best buy from amongst the range of personal pension plans available.

"No one factor should be considered in isolation and investors should always look for consistency in performance over the long term. For peace of mind, savers should be prepared to speak to an independent financial adviser, even when armed with all the facts."

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Arts and Entertainment
Robert De Niro, Martin Scorsese and DiCaprio, at an awards show in 2010
filmsDe Niro, DiCaprio and Pitt to star
News
i100
News
In this photo illustration a school student eats a hamburger as part of his lunch which was brought from a fast food shop near his school, on October 5, 2005 in London, England. The British government has announced plans to remove junk food from school lunches. From September 2006, food that is high in fat, sugar or salt will be banned from meals and removed from vending machines in schools across England. The move comes in response to a campaign by celebrity TV chef Jamie Oliver to improve school meals.
science
Sport
England captain Wayne Rooney during training
FOOTBALLNew captain vows side will deliver against Norway for small crowd
Life and Style
Red or dead: An actor portrays Hungarian countess Elizabeth Báthory, rumoured to have bathed in blood to keep youthful
health
News
peopleJustin Bieber charged with assault and dangerous driving after crashing quad bike into a minivan
News
peopleHis band Survivor was due to resume touring this month
News
people'It can last and it's terrifying'
Life and Style
fashionModel of the moment shoots for first time with catwalk veteran
Sport
Radamel Falcao poses with his United shirt
FOOTBALLRadamel Falcao's journey from teenage debutant in Colombia to Manchester United's star signing
Life and Style
fashionAngelina Jolie's wedding dressed revealed
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Front-Office Developer (C#, .NET, Java,Artificial Intelligence)

    £30000 - £45000 per annum + benefits+bonus+package: Harrington Starr: Front-Of...

    C++ Quant Developer

    £700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

    Java/Calypso Developer

    £700 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, J2EE, J...

    SQL Developer

    £500 per day: Harrington Starr: SQL Developer SQL, C#, Stored Procedures, MDX...

    Day In a Page

    Chief inspector of GPs: ‘Most doctors don’t really know what bad practice can be like for patients’

    Steve Field: ‘Most doctors don’t really know what bad practice can be like for patients’

    The man charged with inspecting doctors explains why he may not be welcome in every surgery
    Stolen youth: Younger blood can reverse many of the effects of ageing

    Stolen youth

    Younger blood can reverse many of the effects of ageing
    Bob Willoughby: Hollywood's first behind the scenes photographer

    Bob Willoughby: The reel deal

    He was the photographer who brought documentary photojournalism to Hollywood, changing the way film stars would be portrayed for ever
    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Hollywood heavyweights produce world's most expensive corporate video - for Macau casino

    Scorsese in the director's chair with De Niro, DiCaprio and Pitt to star
    Angelina Jolie's wedding dress: made by Versace, designed by her children

    Made by Versace, designed by her children

    Angelina Jolie's wedding dressed revealed
    Anyone for pulled chicken?

    Pulling chicks

    Pulled pork has gone from being a US barbecue secret to a regular on supermarket shelves. Now KFC is trying to tempt us with a chicken version
    9 best steam generator irons

    9 best steam generator irons

    To get through your ironing as swiftly as possible, invest in one of these efficient gadgets
    England v Norway: Wayne Rooney admits England must ‘put on a show’ to regain faith

    Rooney admits England must ‘put on a show’ to regain faith

    New captain vows side will deliver for small Wembley crowd
    ‘We knew he was something special:’ Radamel Falcao's journey from teenage debutant to Manchester United's star signing

    ‘We knew he was something special’

    Radamel Falcao's journey from teenage debutant to Manchester United's star signing
    'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

    'I’ll tell you what I would not serve - lamb and potatoes'

    US ambassador hits out at stodgy British food
    Radio Times female powerlist: A 'revolution' in TV gender roles

    A 'revolution' in TV gender roles

    Inside the Radio Times female powerlist
    Endgame: James Frey's literary treasure hunt

    James Frey's literary treasure hunt

    Riddling trilogy could net you $3m
    Fitbit: Because the tingle feels so good

    Fitbit: Because the tingle feels so good

    What David Sedaris learnt about the world from his fitness tracker
    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Saudis risk new Muslim division with proposal to move Mohamed’s tomb

    Second-holiest site in Islam attracts millions of pilgrims each year
    Alexander Fury: The designer names to look for at fashion week this season

    The big names to look for this fashion week

    This week, designers begin to show their spring 2015 collections in New York