However, it is extremely important for investors to begin putting money away for retirement as soon as possible.
With this in mind, FE Trustnet asked three financial advisers about more transparent alternatives available that can help investors to finance their retirement.
Schroder Maximisers
Many industry experts say that the Schroder Maximiser range is one of the best transparent alternatives to a traditional pension.
These funds aim to offer a higher yield than the majority of income products, by focusing on companies that pay out an above-average dividend. The downside to this approach is that it may have a detrimental effect on capital returns.
The portfolios include Schroder Income Maximiser, Schroder Asian Income Maximiser and Schroder Global Property Income Maximiser.
The largest and the longest-running of these funds is the £828m Schroder Income Maximiser, which is currently yielding 6.14 per cent and has been managed by Thomas See since April 2009.
The fund has underperformed against the sector and its benchmark since See took over the fund, but more recently its performance has picked up.
According to FE Analytics, it has returned 24.88 per cent over the last year – making it a top-quartile performer – and has beaten the FTSE All Share, which is up 15.6 per cent.
Performance of fund vs sector and benchmark over 1-yr
Source: FE Analytics
See also runs Schroder Asian Income Maximiser, alongside Richard Sennitt.
The fund was launched in 2010 and has a yield of 6.83 per cent – slightly higher than that of the Schroder Income Maximiser fund. It too has outperformed its benchmark over the last 12 months and has been a top-quartile performer.
Patrick Connolly (pictured), head of communications at AWD Chase de Vere, uses the Schroder funds to top up his clients’ income for their pensions.
"We do like the Schroder Maximisers and we use them for our clients," he said.
"We use the original Schroder Income Maximiser and Schroder Asian Income Maximiser. It seems we recommend them exclusively to clients who are looking for a higher level of yield from their investment portfolio," Connolly continued."The funds have proved to be pretty popular and are attracting a lot of inflows and are good for supplementing traditional pension income."
His comments are echoed by SG Wealth Management’s Neil Shillito (pictured), who likes the funds’ investment approach.
"We use the Schroder Maximiser range, especially the Income and Asian Income funds. They have also just launched a property one."
"We are great supporters, I don’t mean that we plough millions into them, but we recommend them to our clients because they do what they say on the tin, which cannot be said for a lot of funds at the moment."
Fidelity Enhanced Income
Connolly says that Fidelity Enhanced Income is a good fund in a similar mould to the Schroder Maximiser products.
"The other one we use is Fidelity Moneybuilder Enhanced Income. It is a good fund to supplement pension income and is run on a similar basis to the Schroder Maximisers," he explained.
The five crown-rated Fidelity Enhanced Income fund has been managed by David Jehan and FE Alpha Manager Michael Clark since February 2009.
Performance of fund vs sector and benchmark
Source: FE Analytics
In terms of capital performance, the fund has underperformed the FTSE All Share and the IMA UK Equity Income sector since the current management team took over. However, industry experts like the fact that it is currently yielding 7.29 per cent.
Darius McDermott, managing director of Chelsea Financial Services, appreciates the fund’s low-volatility approach to investing.
"With it you get a derivative-based product of a bog-standard income fund. It has a steady manager who tends to do better in difficult markets. For investors looking for high yield, I think you need low volatility, so I think it is a good match," he said.
"It is a high-income product, so it would be good to supplement income whether it’s for a pension or not."
Schroder Secure Distribution 2032
For the more left-field investor, the recently launched Schroders Secure Distribution 2032 fund may be of interest.
On the back of the success of the Maximiser range, Schroders introduced the fund to bridge the gap between the growth potential of a drawdown plan and the certainty of an annuity product.
The fund itself has a finite life span of 20 years – hence 2032 – and has a 10-year accumulation phase followed by a 10-year drawdown phase.
In a recent FE Trustnet article, Gemmell’s Chris Wise said that the fund’s objective looks intriguing, although he is not advising his clients to put their money in it just yet.
"Multi-asset products are becoming more popular and Schroders is trying to be innovative to help advisers with their clients’ pension concerns," he commented.
"Investors should probably wait and see how it develops and how it builds up capital in the coming years. I would see how it fares over the next 12 months and then decide whether to hold it as a pension strategy," he added.
"Advisers have to maintain a close relationship with their clients and decide whether to go to cash or a drawdown policy."
He added: "It seems investors can either go for a fund that ticks the multi-asset box, or a lifestyle platform. Here we see Schroders saying to advisers, 'we have a different approach where this job is done for you'."
However, Connolly is not convinced.
"I think it is a bit too complicated and acts like a structured product," he said. "We are wary that clients will not invest in something that they do not fully understand."