Your future on the line

Insurance, banking and mortgages can all be done by phone. But pensions? By Ken Welsby

The experts, as usual, got it wrong. Pensions were, they said, far too complicated for people to buy by telephone. People, they said, will find it far too difficult. Car insurance might be easy, but investment business is different. It will take too long, customers will be confused and won't understand the implications. Should we be surprised? After all, these are the same experts who told us a dozen years ago that car insurance was far too complicated to buy direct.

It didn't take long to prove them wrong about that, but by then telephone banking had appeared. No branches to call into? No manager to smile and offer friendly advice? Arrange an overdraft at 8pm so you can buy a new washing machine the next day? The public simply won't stand for it, old boy. Then along came mortgages. And of course we know what the experts said: Great idea, but it will never catch on.

So the record shows that telephone business works, and that increasing numbers of people prefer it. And yet, this time, there is a grain of truth in what the experts say. Not that it is impossible to buy the right pension by telephone, but it is more complicated than other financial transactions.

hink about what you need from a pension before you start to make some calls. Consult the Money pages of Saturday's Independent and The Independent on Sunday, and look at the specialist magazines. Ask several companies to send some information, before you start to make serious inquiry calls.

An increasing number of companies offer pensions by telephone, including Abbey National, Commercial Union, Marks & Spencer, Save & Prosper and Scottish Widows.

Some, like Marks & Spencer, offer an "execution-only" service. They will tell you about their product but are forbidden to offer advice as to how the pension plan fits in with your overall financial situation. Others, such as Abbey National Direct, take a different tack. If you want advice, they will do what's known as a "fact find." This involves a professional adviser taking you through a detailed questionnaire about your financial circumstances, and working out an individual pension plan.

It takes time - between 20 minutes and an hour, but the call is free, and you can ring up in advance and arrange for an adviser to call you back at a specific time. To make the process painless, have the following to hand before you pick up the phone: pen and paper, recent payslip, bank statement and a record of any savings or investments which you already have.

A similar approach - advice if you want it, or a straight deal if you don't - is taken by the latest entrant, Virgin Direct, which launches its pension plan tomorrow. You can invest from pounds 50 a month upwards in the Virgin pension and the charging structure is simple: a pounds 2 charge per payment, plus a 1per cent annual management fee. That's it. Pay in pounds 50 and pounds 48 of it goes straight into your personal pension plan. You can skip payments, increase or decrease them, all with no penalty. If you decide to pull out in less than three years, you pay a 2.5 per cent penalty.

One final point to remember: however helpful company advisers may be, they can only advise on their own products. If you want to know how those plans compare with what's available elsewhere, the advice, as always, is to shop around.