If you search on comparison sites such as Money.co.uk, you will see that there are several different providers all with varying offers. If you are unsure which pension provider or product is right for you, seek advice from a financial advisor.
Have a good shop around to see what kind of pension the different companies are offering. To do a bit of research, ask friends, family, colleagues or industry peers who they use for their pension, and ask a little about the service that they have received. This will be a great early indicator of which providers you could use and which ones you should avoid.
Ask for a key facts document from each of the providers you might be interested in to find out the key information that you might need to know before handing over any money.
As some of the pension providers have minimum contributions, it is worth ensuring that you can meet this commitment. As a freelancer, you may have an irregular income or a tight budget, so choosing a pension that suits your income is vital.
If your business is a registered company, any pension contributions you make are allowable business expenses, further reducing your tax liability. The tax efficiency doesn’t stop there, the pension fund grows free of tax too. Usually, 25% is tax-free when you withdraw it after 55.
Pension provider fees
Most private pension providers will charge a percentage of your contribution as a fee, but there may also be admin fees, transfer charges, investment management charges or missed payment or early access penalties.
Fees should be disclosed when you open the pension and regularly throughout the life of the pension. It’s important to keep an eye on the cost as any fees deducted will mean less in the ‘pot’ for your future retirement.
Check how your money is invested
Some pension providers may ask you how you would like your money to be invested, so depending on your appetite for financial risk, you could choose to have your money invested in a variety of different ways.
Low-risk investments may yield a lower return but are more likely to keep your initial investments safer, whereas high-risk investments are designed to give you a high return on investment, but there is also an increased chance of losing a higher percentage of your investment.
Examples of low-risk investments are cash instruments, corporate bonds and loans to the government called GILTS, whilst high-risk investments could be stocks, shares and commodities, such as gold.
Ask for advice
Don’t be afraid to ask for advice from an independent financial adviser (IFA).
You will normally have to pay to get advice from a financial adviser, but this advice will help you make a decision when it comes to looking after your money.
Consider taking a look at unbiased.co.uk or vouchedfor.co.uk that can match you to a local, qualified and registered IFA.