Prudential vs Legal & General: Overview
Prudential and Legal & General represent contrasting pension investment philosophies. Prudential is known for smoothed PruFund products that aim to reduce volatility, while L&G champions low-cost index tracking. The choice often depends on your attitude to risk and investment costs.
Fees Comparison
| Feature | Prudential | Legal & General |
|---|---|---|
| Platform/Management Fee | 0.55% AMC on PruFund Growth | 0.25% on default index funds |
| Fund Range | Over 100 funds including PruFund smoothed range | Range of index trackers and multi-asset portfolios |
Prudential: Strengths
- Unique PruFund smoothing
- Reduced volatility
- Good for cautious investors
- Strong with-profits options
Legal & General: Strengths
- Much lower fees
- Simple index tracking
- Strong default funds
- Transparent approach
Which Should You Choose?
Choose Prudential if you are a cautious investor wanting smoothed returns and reduced volatility, particularly as you approach retirement. Choose Legal & General if you want the lowest possible fees and believe in the long-term benefits of passive index investing.
Key takeaway: Both Prudential and Legal & General are reputable pension providers. The best choice depends on your individual priorities, whether that is lower fees, wider investment choice, simpler management, or better service. Consider your pot size, investment style, and how hands-on you want to be.
Frequently Asked Questions
L&G is significantly cheaper at 0.25% vs Prudential's 0.55%. Over 20 years on a £100,000 pot, this difference could amount to tens of thousands of pounds in saved fees, assuming similar investment returns.
PruFund smoothes investment returns using an Expected Growth Rate mechanism. Instead of reflecting daily market moves, the fund price changes gradually. This protects against sudden drops but also limits participation in sharp rises.
Performance comparisons depend on the period and market conditions. In volatile markets, PruFund's smoothing provides steadier returns. In rising markets, L&G's index trackers typically capture more upside. Long-term, lower fees tend to benefit L&G investors.
Prudential's PruFund is often preferred by those near retirement due to reduced volatility. L&G's lifestyle funds also reduce risk as you approach retirement but through traditional asset allocation rather than smoothing.
Both are major FTSE 100-listed companies with strong financial ratings. Prudential is part of M&G plc. L&G is one of the UK's largest investment managers. Both are FCA-regulated with FSCS protection.
Yes, transfers in both directions are possible. Note that transferring from PruFund may involve dealing date delays, while L&G transfers are typically faster as standard fund units.