How to set up a private pension
Unlike with workplace pensions, you’ll have to set up your own private pension, should you choose to do so.
The first step is to decide on a personal pension provider, like True Potential Investor. There are many providers available, so it’s important you weigh up the pros and cons to help you find the most suitable provider for your needs. Overall, here are the most important factors to consider:
- The pension provider’s charges.
- Rules around the timing and size of your contributions.
- The available investment options.
- The transfer options available to you.
Once you have selected a provider, you will need to choose from the different types of personal pensions. These include:
- Standard personal pensions — you’ll choose from a wide range of investment strategies, with varying levels of risk. Your investments are usually managed on your behalf by your pension provider.
- Stakeholder pensions — you’ll enjoy low minimum contributions, capped charges and a default investment strategy. Some employers offer this type of pension, although you can set a stakeholder pension up yourself.
- Self-invested personal pensions — suitable for larger contributions, you have greater control over your pension investments, although this may be unsuitable if you are inexperienced. Unlike standard personal pensions, you’ll manage, deal with and switch your investments as and when you want to. They usually have a higher charge than standard personal pensions.
You’ll then need to decide how to invest your funds. Each option has varying levels of risk, so you should choose the most suitable option for you.
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