If you are paying into your employer's scheme, or have an old scheme that is quietly accumulating, then give this some immediate scrutiny. You may not be getting a good deal on this portion of your wealth.
The Office for Fair Trading has this month agreed a set of reforms into the £275bn market for UK defined contribution (DC) workplace pensions - the type of scheme into which the employer, employee or both make contributions on a regular basis and future benefits depend on investment performance.
An OFT study found problems in DC pensions which mean some savers do not get value for money. For example, employers may often lack the capability or the incentive to assess value for money. This means that too many savers are getting a rough deal due to hidden complexities and charges.
But it is not just transparency of charging that the OFT criticised, but transparency of holdings stating that "a recent study looking at people approaching retirement found that 77 per cent of individuals in their 50s and 60s did not know what their pension fund is invested in".
The bottom line is that no one looks after your money as well as you do and the fundamental problem with the governance of workplace pensions is that someone else (your employer) is choosing your pension for you. Some employers do a good job but inevitably not all do.
The OFT's reforms will take time to be implemented so it is up to you, the investor, to establish that your scheme is up to scratch. If it is not, then you have a couple of options. Lobby the trustees to get changes implemented. Or consider transferring to a self-invested personal pension. The latter is not an easy decision to make as your company scheme may come with various guarantees or valuable life insurance attached. If in doubt, take independent financial advice from an adviser with pension transfer qualifications.
