Ask the Expert: Is a self-invested pension worth the effort?
PUBLISHED: 11:01 12 January 2018 | UPDATED: 12:05 12 January 2018
Our reader wants to know if self-investing and making active investment decisions over their pension, rather than putting faith in a pension company, would be a good idea. Carl Lamb of Almary Green responds.
I’m self-employed and want to start saving for my pension – I’m currently aged 29. I’ve had a look online and it seems to me that I’d be putting a lot of trust in pension companies by letting them decide where to invest my money. I’ve read about self-invested pensions and think it might be better to decide myself where the money should go. Do you think this is a good idea?
Response from Carl Lamb of Almary Green
Firstly, when you invest in a personal pension, you do get to make decisions about the type of investments to be held in your pension plan. Normally these might be funds that group types of investment together – emerging markets, UK companies, etc – or funds that group investments that meet an overall risk profile. You can opt to hold your money in a range of different funds to mitigate the risk. It is a good idea to get advice from a financial adviser before you sign up to a pension so that they can help you work out how much you need to save – or how much you can afford to save – and what level of investment risk is acceptable for you. Self-invested pensions do have their place and give the pension saver the ability to make decisions about where the money should be held, but they are usually considered only suitable for those who have a good understanding of the investment marketplace and can commit time to managing their portfolio. There are other occasions where they are suitable – business owners who may want to hold their business premises in their pension fund, for example. The other factor to bear in mind is that self-invested pensions may have higher charges than a personal pension. In the main, unless you have the time and expertise to actively manage your fund, you may be better off with a regular personal pension fund.