Pension firms resist price war

BIG-NAME personal pension providers are starting to reduce charges, although consumers have yet to benefit from a price war, according to Bacon & Woodrow, the pension consultancy, which last week published its annual survey of pension plans.

Many companies are holding back, hoping that sales will pick up again automatically after the recent mis-selling scandal. The fact that many mutual insurers are selling personal pensions may be a further factor restraining a price war, it is suggested. These firms do not have shareholders so are under less pressure to kickstart the market.

The price-cutters include Equitable Life, Allied Dunbar, Legal & General, Standard Life, Norwich Union and Sun Life, says Bacon & Woodrow. New requirements this year for companies to disclose charges to potential customers have been the main prompt for the price cuts, it says. "Policy charges by the major pension providers are generally falling, probably as a result of fierce competitive pressure among the market leaders and the disclosure regulations which came into force at the start of 1995," says Andrew Warwick- Thompson at Bacon & Woodrow.

Most noticeable have been moves to reduce sales commissions at the start of the policy and spread them more evenly over a policy's life, making plans worth more sooner. But Mr Warwick-Thompson warns against reading too much into the new disclosure of policy charges. In particular, the disclosed annual management charge, typically 0.5-0.75 per cent a year, does not include all the costs of running the fund. The hidden charges - covering, in particular, the costs of buying and selling the underlying investments - could add up to 0.5 per cent a year to the costs of a policy but will vary significantly. At worst, these could be enough to turn what seems a low-charging policy into a high-charging one.

The Bacon & Woodrow survey identifies a number of best buys based on long-term performance, flexibility and charges (see table). Its comparisons include only those plans with a five-year performance record, so exclude many of the new lower-cost, flexible providers such as investment and unit trust companies. In addition, it only covers plans available on a nil-commission basis - which means that consumers can buy them through a wholly fee-based independent pensions adviser, such as Bacon & Woodrow. The recommendations also exclude with-profits policies. The firm regards the unit-linked pensions as better overall bets for all but the most cautious.

BEST-BUY PENSIONS*

Best Good

One-off payments of Standard Life Sun Life, Sun Alliance,

pounds 1,000 or pounds 5,000 a year Norwich Union Legal & General,

London & Manchester

Monthly payments Standard Life Gartmore,

of pounds 100 or pounds 200 Norwich Union Equitable Life

Serps opt-out plan, Equitable Life Sun Alliance,

maximum NI payments London & Manchester

Pension transfer of Standard Life Legal & General,

pounds 50,000 or pounds 100,000 Norwich Union Equitable Life

Source: Bacon & Woodrow. *Best-buys may change for different premium levels and if investors use a commission-charging adviser.

Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
PROMOTED VIDEO
News
A cabin crew member photographed the devastation after one flight
news
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
food + drink
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
News
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Life and Style
fashion
Arts and Entertainment
The John Peel Lecture has previously been given by Pete Townshend of The Who, Billy Bragg and Charlotte Church
musicGodfather of punk will speak on 'free music in a capitalist society'
News
peopleAt least it's for a worthwhile cause
News
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
tech
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.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments