You can have the cheapest plan on the market, but if the underlying funds do not perform, then you will still be disappointed in your investment.
What’s under the bonnet?
Traditionally, pension plans have not offered many funds. At about the same time as Stakeholder plans were introduced, it was becoming recognised that a wider choice of funds was needed, especially funds managed by fund specialists, rather than the in-house pension funds.
What developed was a pension with charges much lower than traditional plans but also offering funds managed by some of the world’s top fund managers (External Funds). The result was the ability to invest in a pension with (say) Legal & General, and all the tax benefits that incurs, while having your funds invested with (say) Fidelity, Artemis or Threadneedle Asset management – all within a competitive charging structure.
A number of companies have gone further and linked their pension contracts with a fund supermarket or platform. These are large umbrella organisations who offer investment into almost any registered fund. By linking their pensions in this way, they are effectively creating an “open-architecture” pension, whereby you have virtually no restrictions on where your money is invested. Given the comparatively low ongoing fees and no front-end charges, this is a very positive development in the evolution of pension plans.
A Pension is an Investment
At Reckitt House, our view is pension money should be treated the same as any other investment. It should be invested across a suitable range of asset classes and investment funds, run by specialist fund managers with good track records, reviewed regularly to adapt and change with changing economic conditions and with charges and fees as low as possible.