The best and worst: Non-tied advisers offer better deal - Personal Pension Charges

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CHARGES on personal pensions eat heavily into the returns, but people are likely to get a better deal from an independent adviser than from a company salesman or tied agent.

This is the conclusion of a survey of pension charges by Money Management magazine. The magazine's research showed that companies with the highest charges tended to sell mainly through their own sales forces or agents.

Independent advisers are normally paid by commission on the products they recommend, but Stephen Phillips, marketing manager at National Mutual Life, is convinced that policyholders benefit.

'The reason we are a low charging office is that we distribute our products exclusively through independent financial advisers. Sales forces and tied agents are a very expensive way to write business.'

He said National Mutual's annual fund management charge was 0.36 per cent a year against 1 to 1.5 per cent charged by many companies. 'Our policy fee is pounds 2 a month whereas some companies charge pounds 3 or pounds 4.'

Single-premium pensions are often recommended by advisers as preferable to regular premium contracts.

'Commission tends to be 4 to 5 per cent whereas commisson on the first year's contributions in a regular premium plan could be 50 to 60 per cent, although the commission in later years would be lower.

'If you take out a policy and transfer it in the early years the return under a single premium plan tends to be better than on a regular premium one,' explained Mr Phillips.

Allchurches Life is currently reviewing charges on its personal pensions wih the aim of reducing them.

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