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Private Pension Advice – 5 Practical Ways to get the Best Advice

Private Pension Advice

Retirement planning isn’t easy, especially when it comes to pensions and private pension advice. Pensions are a favoured way of saving for retirement in the UK. With valuable tax advantages and the opportunity for investment growth, they can be a highly efficient way to create a savings pot for later life.

Here are the five best ways to find pension advice for a private or personal pension.

Also consider: The Best Pension Providers UK

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A note about the State Pension

When you think about your pension, your mind may well go straight to the workplace or personal pensions you have.

However, it’s important to remember that you will also receive your State Pension when you reach the qualifying age.

Currently, the State Pension age is 66, rising to 67 between 2026 and 2028.

You may think this money won’t contribute hugely to your retirement income. But, actually, having a guaranteed income that won’t be affected by investment returns or tax can be reassuring.

You can be confident that there will always be money coming in to help towards bills, even if it won’t be enough in itself to fund your whole retirement.

You’ll only receive a full State Pension if you’ve made sufficient National Insurance contributions throughout your working life. You normally need at least 10 qualifying years to receive any State Pension, and 35 years to receive the full amount.

In 2021/22, the full State Pension is £179.60 per week. Furthermore, the “triple lock” ensures that the value of the State Pension rises in line with the cost of living every year.

You can use the dedicated service for checking your National Insurance record on the website to find out if you’ve made sufficient contributions.

1. Find a free pension advice service

The first place you could look for advice is a free pension advice service.

These free services could provide you with impartial guidance on everything from personal pensions and tax relief, to how much you might need in the way of pension income.

Bear in mind: these free services are for information only. They cannot provide you with personalised advice that’s specific to your circumstances.

Money Helper – formerly the Money Advice Service

Money Helper is a great place to start for free pension advice.

Money Helper is a government-backed information service supported by the Money and Pensions Service from the Department for Work and Pensions.

The site is designed to provide accessible financial information for all UK adults.

Money Helper - Formerly the Money Advice Service

They have dedicated pages for breaking down complicated pension jargon, such as the difference between “defined contribution” pension schemes and “defined benefit” (or “final salary”) pension schemes.

There’s also a particularly useful pension calculator, allowing you to work out exactly how much should be in your retirement pot.

Money Helper is a new service, bringing together the best parts of Pension Wise, the Pensions Advisory Service, and the Money Advice Service’s work to provide a one-stop-shop for money and pension advice.

If you search for the Pension Wise, Pensions Advisory Service, or Money Advice Service website, you should be automatically redirected to the brand-new Money Helper site.

Citizens Advice

Citizens Advice, formerly known as the Citizens Advice Bureau, is an independent organisation providing advice on a range of social issues.

You will find a Citizens Advice office in many towns across the UK. They have a tool on their website for seeing where the closest branch is to you.

You can speak to an independent advisor at a Citizens Advice branch who can provide information on a range of topics.

At the very least, if your concerns are particularly complicated, they may recommend you to a pensions specialist.

The Citizens Advice website also has a range of comprehensive pages with information on all the different types of pensions and what they can offer you.

2. Speak to your workplace pension scheme manager

If you work in a business or for someone else, as opposed to being self-employed, you could speak to your workplace pension manager.

How do workplace pensions work?

When you start work or change jobs, your new employer is generally required to offer you a workplace pension scheme. Your employer will automatically enrol you in the scheme unless you choose to opt-out (this is called “auto-enrolment”).

Currently, you’ll be automatically enrolled if you’re aged 22 or over and you earn a minimum of £10,000 a year from a single job.

Pension contributions are taken directly from your income on a monthly basis. Your employer will also pay in, too. These are known as “defined contribution” (DC) pension schemes.

These are different from “defined benefit” (DB) pension schemes. Here, the amount of pension you will receive is determined by factors such as your length of service and salary.

These pension contributions are invested by the scheme into a pension fund. The fund will contain a range of diversified investments, designed to provide a return on all the contributions made to the fund.

How much gets paid into my workplace pension?

By law, your workplace pension must provide you with at least 8% of your qualifying income, including tax relief.

Of that 8%, the amount your employer pays must be at least 3%. That means 5% will be taken from your pay cheque in regular payments.

Some companies have arrangements where an employer offers extra contributions above the required 3%. Sometimes these will have prerequisites, such as you having to make greater contributions from your income.

What is “tax relief”?

On top of your contributions and the amount your employer contributes, you’ll also receive tax relief from the government.

The amount of tax relief you receive is calculated from your marginal rate of Income Tax. So, if you pay basic-rate Income Tax, you’ll receive 20% tax relief.

If you’re a higher-rate taxpayer or you pay additional-rate tax, you’ll receive tax relief of 40% or 45% respectively.

This is why pensions are considered to be tax-efficient.

For example, if you’re a basic-rate taxpayer, every £100 contribution to your pension will cost you just £80. The tax relief makes up the rest.

Speaking to your workplace pension provider

Some workplace pensions will have a dedicated manager that you can contact directly.

They’ll be able to help you with any questions you have about how the scheme works. However, unless the scheme is managed by a financial advisor, they won’t be able to provide personalised financial advice.

If there’s no specific scheme manager, the company will have a help desk you can contact with any queries about your pension.

Again, they won’t be able to provide personalised advice.

What if I’ve had multiple workplace pensions?

It’s possible that you’ve worked multiple jobs, and so you’ve been enrolled in many different workplace pension schemes.

If this is the case for you, there are two options you could take.

Leave them as they are

You could just leave each pot as is and let them continue growing.

Your pensions will invest in different funds made up of different investments, meaning you have a more diversified set of investments.

This means, if one fund doesn’t perform well, there’s a greater chance that those losses may be covered by a fund that rises in value.

Consolidate all your pensions under one scheme

Alternatively, you could move all your pensions into one scheme.

This would mean transferring all your various schemes into one pension pot, making it more manageable. You could potentially reduce the charges you’re paying on your investments, and benefit from better fund performance.

However, this would reduce the diversification that various pots offer you. You may also lose certain benefits that individual pensions offer.

This is a tricky and potentially costly thing to do. Make sure you speak to an advisor first before you do this.

3. Speak to a private personal pensions provider

Private personal pensions are similar to most workplace schemes. The main differences are that you start the pension yourself, rather than being enrolled via your workplace, and you don’t receive any employer contributions.

This makes them ideal as an extra pension pot to provide more diversification to your retirement savings. They are also useful for self-employed workers.

Generally speaking, there are two types of private personal pension: stakeholder pensions, and self-invested personal pensions (SIPPs).

What is a stakeholder pension?

Stakeholder pensions are considered a more flexible way to save for retirement.

You make contributions to a private scheme. This could be a single lump-sum payment, or you can make more regular contributions from your income.

The pension provider will then invest this money on your behalf in their range of funds. They’ll also add tax relief at your marginal rate of Income Tax.

Generally, stakeholder pensions have higher management costs than a SIPP. They also tend to be lower risk, as a professional fund manager takes care of your investments.

What is a self-invested personal pension (SIPP)?

A self-invested personal pension (SIPP) is a type of private pension where you select your own investments.

As with all private pensions, you can make a lump sum payment into your SIPP, or make smaller regular payments over many years.

The main difference from stakeholder pensions is that you have to manage your investments. As a result, SIPPs tend to be more high-maintenance. They also tend to have lower management costs, as you are responsible for keeping an eye on investment performance.

Additionally, SIPPs can hold a wide range of assets. They can hold cash savings, investments such as funds or stocks and shares, or even commercial property such as your business premises.

SIPPS are often provided by investment houses. They allow you to manage your investments fully independently, charging either a fixed or percentage-based fee on your assets.

One of our recommended SIPPs is the one offered by Interactive Investor, giving you your first six months free from fees.

Which pension should I choose if I’m self-employed?

For self-employed individuals without access to a workplace pension scheme, a private personal pension presents a good choice for saving toward retirement.

While you won’t benefit from employer contributions, you’ll still be able to make the most of the tax relief on offer.

You’ll also be able to make the most of potential investment returns on your contributions.

You could open either a stakeholder pension or a SIPP, depending on how active you want to be in managing your retirement fund.

If you’re self-employed and you’d like to find out which type of pension would most suit you, check our ranking of the best pension providers for self-employed people.

How much should I pay into a private pension pot?

Realistically, it depends on your personal circumstances and the kind of lifestyle you’re targeting in retirement.

While there isn’t a one-size-fits-all solution, there are a couple of popular methods some savers employ.

Contributing half your age

One way to measure your contributions is to contribute a percentage of your earnings that’s equal to half your age.

So, when you’re 32, you should be contributing 16% of your earnings to your pension.

This method ensures your contributions grow with you as you get older and your income increases.

The “50-70” rule

Another way to look at your contributions is to use the “50-70” rule, in which your target retirement income is between 50% and 70% of your current earnings.

So, if you earn £50,000, you’ll need between £25,000 and £35,000 as a regular income in retirement to maintain your current standard of living.

Once you have a figure to target, you can adjust your contributions accordingly.

Speaking to your pension plan provider

Nearly all personal pension providers have a help desk where you can ask questions about their specific schemes.

They’ll be able to provide advice on how their scheme works, as well as information on the available funds and investment choices.

They may also be able to give you an idea of the typical sort of fees you can expect to pay.

However, be aware that this help is not from financial advisors. They won’t be able to provide personalised, independent financial advice that’s specific to you.

4. Speak to a bank or building society

One place you might not have thought of going to for pension advice is your bank or building society.

Speaking to someone face-to-face

You can simply go straight to your bank or building society’s local branch and ask if someone is available to answer questions you have about pensions.

However, much like pension scheme managers, they may only be able to speak generally about pensions. The advice will likely not be personalised to you.

Their advice may also be restricted to the pension products they offer. This means you may not get a full picture of your best options.

Online pension services

Some financial institutions may also offer online pension services.

For example, banks such as Barclays have a full range of pension guides and articles explaining the different types of pensions available.

Partnering with a financial advisor

Some banks and building societies have direct partnerships with financial advice firms that account holders can make the most of.

For example, both Lloyds Bank and Halifax have working relationships with Schroder’s Personal Wealth, providing pension advice to their customers.

Contact your bank or building society to find out whether they offer this kind of service.

Bear in mind that you may have to have a certain level of wealth to make use of a service like this.

5. Work with a financial advisor

If you’re particularly unsure about what to do, you should speak to a pension specialist and take financial advice.

Why should I take advice?

A financial advisor can look at your entire financial situation and give you personalised advice based on your income, expenditure, and current and future circumstances. They can take your goals and ambitions into account, too.

So, for example, if you wanted to retire at 55, a financial advisor will create a bespoke plan targeting that goal.

Many financial advisors are entirely independent, meaning they can recommend the right pension for you from a wide range of providers, rather than being restricted to specific products.

How much should I expect to pay for pension advice?

The cost of advice will vary from advisor to advisor.

Typically, there are three ways advisors can charge for pension advice. Your advisor must be upfront about which of these models they use and how much the advice they provide is going to cost you.

Flat fees

Your advisor gives you a set rate for how much they’re going to charge. This could be an annual fee, or a separate fee for each piece of work they do for you.

Hourly fees

Your advisor tells you their rate and then provides a breakdown of how long they’ve spent working on you and your financial plan.


Your advisor takes a percentage amount of your assets. There could be an initial fee, and then an ongoing management charge.

Typically, fees will range from around 0.8% to 1% of the value of your pension pot.

How do I choose a financial advisor?

There are plenty of ways to find a trusted financial advisor.

Make sure your advisor is regulated by the Financial Conduct Authority (FCA). You can check the FCA’s Financial Services Register where you can search by name of firm, advisor, or even registered office.

You can use our dedicated “find a local advisor” tool to find the best advisors near you.

Alternatively, you can sign up for a free pension review from a professional advisor.

Get a FREE Pension Review

Get a free no obligation pension review today from a qualified financial adviser.
Our partner Unbiased will connect you with one of over 27,000 FCA-regulated advisers.

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