Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#1
Courtesy Telegraph.
9 out of 10 Pension Fund managers `fail`to warn people about `hidden` Fees which wipe
out £100.000 from a middle class workers pension.
People are continuously denied access to low cost pensions that are readily available.
The RSA report found 21 out of 23 pension funds failed to inform people about the
`hidden` charges.
11 million people were failing to put enough money into their pensions leaving them to
struggle in retirement.
Many people just abandon pensions entirely and government is concerned that millions
more could be`ripped off`.
The charges represent 40 % of a typical retirement savings.
``In Europe pension funds offer cheaper more transparent pensions while in Britain they charge more`
A Dutch person receives a pension 50 % more than the British equivalent because of
transparent ``cheaper`` charges.
Finance johnnies know how to get your money...almost elite greedy pig status........
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#2
I have been reading this. Ignoring the usual ignorant insults coming from Reg of course.
A mixed bag story, some basis of truth, some nonsense. One of the biggest 'hidden' charges suffered by pension funds of course is the dividend tax imposed by Gordon Brown.
The figures as quoted make a lot of assumptions that rarely apply in the real world.
The truth is that pension charges fell dramatically after some rule changes by the PIA in 1995 and then again when stakeholder pensions were introduced. In 1997 Brown thought just providing a Stakeholder pension with low charges limited by law would have people flocking to buy them, as usual he was wrong and under his watch pension sales plummeted and that is a demographic time bomb.
Charges are one part of the equation. Funny - I deal with a lot of people who built up substantial pension sums in schemes started before 1995 when charges were indeed appalling and yet it is these old pensions that these people have to thank for having quite sizeable pension funds. Far too few people have been investing into the newer cheaper pensions.
Cheap, low cost pensions are easily available and such cheap pensions are right for those just starting in pension saving or have very small funds. More sophisticated schemes with higher charges create too much of a charges drag for them to be worthwhile for smaller investment and a lot of people who take them up do not benefit from the investment flexibility they provide.
But, once a sizeable fund has been established and with some good advice, people can take advantage of more expensive schemes that can really pay off. Charges are less important than the right underlying investment strategy.
It can be a big mistake to just go cheap with something as important as this. I certainly have not done so with my pension...
What is important is for people to seek good advice and to make sure it is independent and pay a fee for the advice.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#3
It was so obvious our right winger would blame Gordon Brown I phoned William Hill
but did not lay a bet because I agreed with the odds they gave me....
European Pensions are 50% better than British Pensions offered by our `wonderful`
Finance Johnnies.....QED.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#4
That is a very questionable statistic and I have provided some facts regarding recent pension history though you will not like it.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#5
the way i am reading it is that reg i saying that there are good low cost pensions around but people are not being told about them by their pension adviser.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#6
Thank you Howard our friend always avoids the point and resorts to filibuster and
ofcourse blame Gordon Brown or the Lib /Dems.
Guest 698- Registered: 28 May 2010
- Posts: 8,664
#7
To be fair, Reg, it WAS Gordon Brown who put us in it - and it IS the lib Dems stopping us getting out!
I'm an optimist. But I'm an optimist who takes my raincoat - Harold Wilson
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#8
Define Fair......
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#9
Define fair..... In this case, truthful. Avoid the point, hardly, speak for yourself as you are always doing it.
Most advisers that I know tend to default to the cheap stakeholders rather than take on the more expensive advice led products. That is the easy regulatory route that covers them with minimal commercial risk. Commission based adviser do not cover their costs when selling these, they are loss leaders. There is a problem with those advisers, a minority, who put people into the more expensive products without using the more sophisticated investment propositions they provide and without providing the ongoing advice service to handle it. The changes to regulations coming into force at the end of the years based on the FSA Retail Distribution Review will help sort this situation out.
Of course though the big problem with pensions is not the charges, it is a whole generation of people growing up without any retirement provision. The new NEST rules are better than nothing but that scheme really is cheap and nasty, build to cost not quality to meet a 'forced purchase' rather than selective purchase.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#10
# 9....typical sales talk........Btitish Pensions sold by Finance Johnnies are full of
charges plus .....fact
Dutch Pensions are full of 50 % more money for pensioners retirement...no bull shit..
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#11
You clearly know nothing about the subject and you trying to argue with me makes you look foolish. Your usual defence is to rubbish the poster and to repeat blindly a favoured statistic without further substantiation or any evidence or anything substantial to say. I do not sell pensions, I sell a fee based financial advice service of which pensions are one of the tools I use to achieve a client's objectives based on thorough whole market research and good investment advice, with my fees reflecting performance. Provide the basis for that claim you make and I can point out the inconsistencies.
You should be a journalist Reg, you never let the facts get in the way of a good story.
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#12
Save all your sales `talk` for your clients...read the RSA report for the truth.
Guest 745- Registered: 27 Mar 2012
- Posts: 3,370
#13
Never seen your Pensions topic reg sorry.
Howard feel free to delete my Pensions topic.
So haw long before these cheaper pensions coming out of Europe come to the UK,
I would love to have 50% more on my pension
Guest 745- Registered: 27 Mar 2012
- Posts: 3,370
#14
18 July 2012 Last updated at 13:20
Private pension charges hidden, says report
The real cost of investment for private pension savers can be much more than they realise, the RSA says
Private pension firms have been accused of hiding some of the costs they levy on customers' investment funds.
A report by the Royal Society for Arts (RSA) says 21 out of a sample of 23 firms failed to disclose the full investment costs, when asked.
This meant that customers were left unaware that their pension pots were being eroded by the charges.
The Association of British Insurers responded that its members revealed all costs, as required by the regulator.
"All employees who have contract-based defined contribution pensions have their charges disclosed in their key facts information when they purchase a pension," said Otto Thoresen of the ABI.
"This is required by FSA rules," he added.
'Enormous impact'
When the RSA questioned the 23 pension firms, all of them said that customers' accounts had to pay an annual charge, and other normal overhead costs for administration, legal and accountancy services.
But only two firms acknowledged that there would be other one-off or variable fees, such as the costs of stamp duty on share purchases, or the stockbroking fees associated with share and bond trading.
The RSA cited previous research which has suggested that such costs might add another 1.4% to the annual costs being paid by customers.
That would be on top of the explicit costs, averaging 1.7% a year, bringing the potential annual charge on a pension pot to possibly 3.1% a year.
The RSA said its report uncovered, "how those selling pensions fail to reveal what is charged for such items as audit and custodial costs, and other hidden costs including taxes, stock lending fees and broking commissions".
"Furthermore, even when costs are declared, it is not done in a way in which typical pension savers are likely to understand.
"The enormous impact of fees, where an extra 2% annual charge can, over the lifetime of a pension, result in a halving of pension benefit, is not understood by individual consumers or by small employers," the RSA added.
'Discredited research'
The RSA recommended that the UK copy the example of Denmark where people taking out a personal pension are given annual statements, like a bank account, revealing the full impact each year on their investments of all charges and costs.
But the Investment Management Association criticised the report, describing it as "sensationalist headline-seeking".
"It does itself no favours by quoting discredited research which exaggerates the cost of managing pension investments many times over," said Richard Saunders, chief executive of the IMA.
"For retail funds there is already a gold standard of charges disclosure, mandated under EU rules put together after extensive consultation and consumer research.
"We need that standard rolled out across the whole pensions and long-term savings market," he added.
About six million people contribute to personal pension plans, according to recent figures from the Office for National Statistics (ONS).
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#15
A few points here:
The above is not referring to modern stakeholder or personal pensions, in the former case the charges are capped legally at 1.5% per annum for the first 10 years and 1% of the fund value per annum thereafter. These can be cheaper if you pay a fee for the advice and can be as low as 0.5% p.a. if you really want cheap and use a tracker fund. Many Personal pensions can be just as cheap as that as long as you do not use external fund managers. There is no chance of Stakeholders having charges that approach those quoted.
I suspect that this survey was of old schemes that are no longer being marketed or, pensions such as the one I have chosen for myself rather than go cheap. My own pension is not suitable for anyone with a small fund because charges would cause an unacceptable drag on performance while on a larger fund the increased potential for performance makes it worthwhile.
I note that a lot of the costs are those that pension companies have no control over, such as stamp duty. Passive investment can be used if you want to avoid those costs. The tax raid by Gordon Brown on pensions dwarfs these so called 'hidden charges'.
This research is certainly very flawed.
Fund/Pension management companies, apart from the Key Features they have to provide that demonstrate the effect of charges, quote fund manager charges or AMC as a percentage. A typical one in my pension for instance is 1.5% the so called 'hidden charges' are also quoted as making up the 'Total Expense Ratio' (TER) which can increase the AMC to 1.7% typically, higher for the most actively managed focus funds. I hold 22 funds with various AMCs and TERs in my pension. In the case of my pension I also have a wrapper charge of about £100 per annum and that is it for charges with the wrapper charge falling away to zero when my fund reaches £200,000. It is the wrapper charge (higher on pensions smaller than mine) that is reason smaller pensions should not be in schemes such as mine but in cheap stakeholders.
One further point.
As I have said cheap pensions are available and will always look 'better' in like for like projections at set growth rates than more expensive schemes. But - the pension has to achieve that projected growth for the comparison to be valid. The fact is the quality of the investment management can make a huge difference and that is why I go for a more expensive scheme and I am happy with those charges. Performance matters and i can demonstrate this as follows:
Source: Trustnet - to 19/07/2012
PN Mixed Investment 40%-85% Shares - This is the old Balanced Managed Sector and is where most people tend to invest and funds in this sector can be accessed via cheap stakeholder even at 0.5% AMC - average performance net of charges 10% pa over the last 3 years.
My own pension, same time frame: 14.7% per annum net of fund manager charges. That is 4.7% per annum better but I do have some additional charges to allow for for which I need to outperform by approx. 0.1%, making a net gain of 4.6% p.a. over the cheaper option.
Who wants cheap? Not me.
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#16
I should add to the above to be fully compliant with the regulations:
Past performance is not necessarily indicative of future performance
Funds can go down in value as well as up
You should take professional financial advice and make no investment decisions based on what I have said above.
Guest 653- Registered: 13 Mar 2008
- Posts: 10,540
#17
Thanks Barry - Jean and I are very happy with the way you look after our small investments. We both know that you know what you're talking about on this subject - that's what makes you a good IFA.
Roger
Guest 716- Registered: 9 Jun 2011
- Posts: 4,010
#18
Apparently,it is said,some financial advisors receive a fee or lunch ( there is no such
thing as free lunch ) also from the pension company they advise their clients to `buy`
from....don`t think that can be true....that would be unethical would it not ?
Guest 655- Registered: 13 Mar 2008
- Posts: 10,247
#19
Are you suggesting that it is unethical for an adviser to get paid for the work they do?
There are strict rules for adviser remuneration. I was one of the first, perhaps the very first, adviser to launch a fee-based system specifically designed for the mass market back in July 2004 when I stopped all 'commission only' advice.
I did in fact have a lunch bought for me quite recently by a rep from a major insurance group. It does not happen very often and is very nice when it does. It was a 'thank you' for placing a large case with this leading SIPP provider. If you think I am going to be influenced by a lunch regarding a client who generates about £4,000 a year for my business then you are sadly deluded.
Your little sly personal digs at me are increasingly sad Reg - do get a life.
howard mcsweeney1- Location: Dover
- Registered: 12 Mar 2008
- Posts: 62,352
#20