What Is A Pension Investment Platform?

When investing a pension fund, perhaps from a pension transfer or drawdown arrangement pension platforms are often discussed as a potential option. In this post, we answer the question what is a pension investment platform and discuss a related concept – a wrap.

What Is A Platform

Platform is a term used in Information Technology (IT) to describe a hardware or software solution used to deliver a particular service or application. An investment platform holds information on a wide range of investments that may be securely accessed by an authorised user.

A platform delivers a convenient way for the user to view the latest status of all their investments, the total value of their portfolio and to buy or sell assets at whatever time may be convenient. A platform delivers real time information that may be accessed via a computer or even a smartphone.

Typically, a platform may allow trading of stocks and shares and various bonds, it may also hold, cash, ISA’s, SIPP’s, property and various funds. A stockbroker is not required to buy or sell shares on a platform.

Advantages Of The Platform Approach

Investment choice, ease of access and full transparency on the performance of investments are the key advantages of an investment platform. Other advantages include:

  • Easy access to a very wide range of investments, asset types, funds and fund managers.
  • Simplifies trading in stocks, shares, and bonds.
  • Replaces multiple reports from multiple providers and accounts.
  • Everything is held in one place.
  • Potential simplification of tax reporting.
  • Reduced trading fees due to economies of scale.

Disadvantages Of A Platform

A platform does come at a cost and may not be the ideal solution for some. While flexibility and ease of access are important it is equally important to ensure that functionality is delivered at an acceptable cost. There is a wide range of pricing structures and charges. Disadvantages include:

  • Information overload. Platforms may deliver considerably more information than the average investor requires.
  • Fees and charges.
  • Some platforms limit the funds and investments available. It is therefore important to choose the correct platform to match a particular set of needs. If a poor choice is made initially there can be costs involved to move.
  • Platforms do tend to offer the most advantages to those holding higher value investment portfolios.

What is a Wrapper?

An investor may access a variety of wrappers on a platform including SIPP’s. Wrappers surround investments keeping them in a tax free environment. A wrap can hold a number of wrappers.

The intention of the above is to provide an overview and as such it is oversimplified. The detail can be complex with the use of terms overlapping. Should you have any questions we will be happy to help. Simply call 0800 043 8341 or email enquiries@thepensionreviewservice.com

The information in this article does not constitute financial or other professional advice. You should not take action on the basis of this article without seeking regulated independent financial advice that addresses your specific circumstances.