With the basic state pension running at around £87 a week (2008) the question of whether you will have enough to live on in your retirement is becoming more and more pertinent. Start thinking, as many do, that the State pension might not even be around by the time today's 30-somethings reach retirement (at an ever increasing age) and you'll need to think quickly.
For many people, pension provision starts and ends with the State. For the next category of people they'll realise that they have to do something but will only get as far as looking at packaged pension products. The last group of people will shun the packaged products opting instead to save in their own way for retirement whether that be by way of paper investment, plain old savings or even bricks and mortar. People who fall into the last category tend to be either very financially savvy or rather naive - the former will probably benefit, the latter might struggle. Packaged pensions provide the ideal half-way house but how do you chose?
I started my quest by looking at historical performance of the funds that the pension companies invest in and it quickly became apparent that Friends Provident often came out at or around the top for managed funds. Of course, that was many years ago and historical trends cannot tell you what will happen in the future but I'm pleased to say that my funds are still performing well.
So, what do I think of them as a company?
I first set up my pension with the aid of a financial advisor and so he handled much of the paperwork that needed to pass between me and Friends Prov. However, since that initial set up I've had cause and occasion to contact Friends Prov on a number of occasions and each time I've found them very helpful. I've changed my name, I've both increased and decreased the amounts I pay into the pension, I've contracted in and out of SERPS and I've changed funds. Each change request has been dealt with quickly and efficiently via their telephone service in all cases and then any necessary paperwork has been sent and returned via the mail.
One of the key considerations when looking at a pension is the range of funds into which your money can be invested. Everyone and every situation is different and so what's good for me might not be good for you but I've found Friends Prov to have a good range of funds at different levels of risk. Moving between these funds is straightforward as one refines one's ideas as to where best to place money for an excellent return.
Friends Prov currently offer both a Personal Pension and a Stakeholder Pension. Stakeholder pensions are relatively new to the market and the main difference is that they are limited in terms of charges that can be made against the investments that you make. This makes them suited to the majority of people, even those with very little to invest but they won't provide the riskier funds which are likely to give a bigger return.
Pensions can now be purchased online and, in theory you don't need any advice before you do buy. However, I would recommend that you do seek some kind of advice if you don't know what you are doing. Friends Prov do have financial advisors but, as they are tied agents and can only advise on Friends products I have not used them. Their services have been offered though.
Payments into the plans are very flexible and the plans will accept lump sums or monthly deposits of a combination of the two. You can stop and start repayments as you wish.
Statements of account are sent out at any time on request or yearly. Fund values can also be looked at online if you've registered for that service. I've often found that my pension statement is one of the last bits of paper to arrive with me at the end of the tax year but which are necessary to fill in my tax return. This could, in my opinion, be improved - my other pension providers don't seem to have this issue.
I've not yet come to retire so can't comment on how efficient they are at the end of the day or indeed whether their full automatic lifestyling options work (these mean that as you approach retirement you can opt for your fund to move out of shares and into cash which is a lot less risky).
In my time with Friends Prov they have demutualised (so I now have some free shares in them) and they're currently being touted as a take-over option. However, I have confidence in the fund managers and will just have to review the situation if they are taken over.
Pensions are hugely personal things and in a review of a provider I can't say whether they are right for you or not (and in fact the FSA would have something to say if I purported to do so!) but I can say that my experience of the provider has, thus far, been very positive.