Give me a call sometime

Buying a pension over the phone is quick, simple, flexible, and far cheaper than the traditional schemes - and it keeps the glib-talking salesmen away from your door.

IT WAS the entrance of Marks & Spencer and Virgin Direct into the market almost three years ago that gave a boost to direct sales of pensions. Almost overnight, thousands of the under-40 generation who had been largely unaware of the need to save for retirement, or were wary of dealing with insurance companies, found that they could deal with untraditional pension providers who they trusted.

Prior to this, the personal pensions that could be bought over the telephone were largely confined to more sophisticated investors. Direct sales had been around since the early Nineties, but in the main the providers were selling plans linked to investment trusts.

Offered by companies such as Merchant Investors and Foreign & Colonial, they only appealed to a small section of the population who understood the sophisticated nature of investment trusts.

The new entrants to direct selling, followed by the likes of Direct Line and Tesco, took a more down-to-earth approach, largely offering plans tied to tracker funds that mirrored the performance of the leading stock market indices. A number of traditional pension providers, such as Eagle Star, Legal & General, and Scottish Widows, seeing the change in the market place, also began to offer similar plans.

The direct sellers are beginning to take an increasing share of the pension market. While less than 4 per cent of the near pounds 70bn contributed to pension plans last year was arranged over the telephone, it is a steadily growing section of the market.

The rules governing personal pensions are the same whether they are bought over the phone, from an independent financial adviser, or through a company salesman.

So long as you have earnings from non-pensionable employment, you can take out a pension plan. And as long as you stay within the rules governing maximum contributions, all your premiums will be eligible for tax relief at your highest rate of tax. This mean that your investments will grow in an almost tax-free environment.

If you do not need any advice (and even if you do, for that matter) buying a pension over the phone is simplicity itself. Most of the providers are available between 8 am and 8 pm every day of the week, on either a freephone or a number that charges the cost of a local call, with Eagle Star even offering a 24-hour service.

You'll find your call will usually be answered within a couple of rings. All you then have to do is tell the operator your name and address, and the details of the schemes will be sent to you within a day or two.

A number of direct providers now offer advice if you need it. Of course, the advice will only be about that company's own pension plan. You'll find that you will be speaking to a fully trained member of staff who will take you through a quick fact-find, usually lasting between 20 and 40 minutes, to ascertain that you are eligible to take out a personal pension, and to find out if the plan will suit your individual needs. After this is done, and assuming that you are eligible, details will be posted.

In the leisure of your own home, and with no sales pressure, you can then look at what the direct providers offer. You'll find that they offer a number of advantages over traditional personal pensions. To start with, they cost less. You can start a plan from as little as pounds 30 a month with Tesco, but most have a higher starting point.

Charges are clearly laid out and tend to be much lower. This is because there is no need for any expensive office accommodation, just the cost of a call centre usually located in a low-rent part of the country.

Telephone pension providers also argue that they pay no commission to their salesforces. This is hotly disputed by traditional advisers, who argue that the telephone-based companies all pay bonuses of some sort to their staff. But the huge up-front commissions received by typical salesforces are non-existent in a phone pensions environment.

Most of the direct pensions are more flexible. If you want to put in a lump sum, you can. Payments can be usually be changed, even stopped, without penalty. Most will also allow waiver of premium benefit, which will insure that contributions will still be made if you are unable to work for long periods because of accident or ill health - Direct Line offers this free of charge. They all allow for earlier retirement than originally stated, as long as it's after age 50, without penalty.

No wonder direct pension providers, with their lower costs and greater flexibility, are expected to take an increasing share of the pension market. It's a wonder that people still take out more expensive, inflexible, pension plans still sold by the majority of traditional pension providers.

Who to contact for a telephone bank account

Alliance & Leicester on 0500 959595; First Direct on 0800 242424; Barclays on 0800 400100; Egg on 0845 6000292; Legal & General on 0500 111200; Lloyds on 0800 147789; Midland on 0800 180180; NatWest on 0800 200400; Citibank on 0800 008800; Safeway on 0800 995995; Standard Life Bank on 0345 555657.

Who to contact for a telephone pension

Virgin Direct on 0345 900900; Marks & Spencer Life Assurance on 0800 363432; Direct Line Life on 0845 300233; Eagle Star Direct on 0800 776666; Legal & General Direct on 0500 909090; Scottish Widows Direct on 0345 678910; Tesco on 0845 8455555; Merchant Investors on 0800 374857; Foreign & Colonial on 0171 454 1415.