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Political pressure grows on pension charges

A Parliamentary motion calling on the Government to take urgent action to drive down pension fees has been signed by 48 MPs.

The Early Day Motion, tabled last week, says the MPs are concerned that charges are not understood by consumers and could be costing them up to £67.2bn a year. It says most of that amount goes toward the wages and bonuses of traders and fund managers.

It says: “This House believes that without reform pension funds management business opportunities for the UK financial services industry could be lost; and calls on the Government to take urgent action to drive pension charges down and help the next generation of pensioners and the communities they live in to have a safer, more secure future.”

The EDM says it believes costs are continuing to rise, even though they are already higher than those charges to invest in French, German and American funds.

Yesterday, Labour leader Ed Miliband aligned himself with pensions minister Steve Webb in calling for a reduction in pension charges and threatened to push for them to be capped if this does not happen. Labour MPs make up for 42 of the 48 MPs signed up to the motion.

The National Association of Pension Funds is currently running a review of pension charges to look at ways of making them more transparent.

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. i propose that the industry devise a basic 100 question multiple choice questionnaire for politicians. If they cannot answer these then they are not allowed to vote. the rhetoric without knowledge and experience has created the mess we are in

  2. Charges on financial products such as pensions, savings and protection have reduced massively over the last decade. Bank charges are still too high and bank’s tend to levy much higher front-end charges than most IFAs but, in general, the politicians are debating an issue that no longer exists.

    If they want to know why its virtually impossible to reduce charges still further (making comparisons with other countries) then the politicians should ask questions about the weight and cost of regulation (which has increased 10-fold over as many years) and, at the same time, do a proper cost-benefit analysis (based upon historical facts) to determine whether UK Financial Services and Joe Public really need a bigger version of the FSA going forward.

  3. Never mind charges Mr Milliband, what about the £6 billion per year discreetly robbed from funds by Gordon Brown and your party. Restore the Advanced Corporation Tax Dividend reclaim, reduce regulatory costs,associated quangos and there’d be a lot more left in the funds. Why should Fund managers and traders not be paid when MP’s are remunerated by taxpayers but that’s O.K.

  4. The providers have to make a living
    We have to make a living
    What do they think we are, so sort of multifaceted charity?
    And all of that within the most terrible regulatory regime, akin to the gesstaaapo in it’s outlook.

    It’s a bit rich for those theiving politians to lecture us on charging. Maybe they should target the FSA.
    Ooops I forgot, there’s nothing you effete bunch of wasters can do about the FSA is there?. Better pick on the lower hanging fruit.

  5. The products have never been so well priced. No more Bid/Offers, Different Unit types, front end loaded etc…So the product provider gets a small amount. The IFA gets his bit . The two combined usally alot less than the fund provider. The main drain is the AMC of the individual funds. These fund managers do not justify their existance in many cases but still get vast rewards & raise vast revenue for fund houses. Then I think you will find polaticians on most boards! Then there is the cost of regulation. Say no more…

  6. Pensions??? What’s the difference between pensions and any other form of retail investment vehicle – except that the restrictions on access make investors less likely to choose pensions as a method of wealth accumulation!

  7. Do these fools really believe more would have gone into pensions over the last ten years if charges had been any lower? Charges are just an easy political target. Excessive, costly (yet largely ineffective) regulation, complication, constant tinkering, increased taxation, falling annuity rates, lack of consumer confidence etc…. are why people haven’t and won’t pay into pensions. Otherwise the SHPs would have flown off the shelves in the Post Office – which they didn’t. Sadly ill infomred political posturing may sound nice but will not solve the problems these idiots were elected to solve. I recently turned away a teenager who wanted to put £50pm into a pension and told him to look online for an SHP or ISA; the idiots have created a regime where it would cost too much to give him any advice at all. Trouble is he wanted to speak to someone for 20 minutes, that is all. Sadly I cannot do that without writing War and Peace and carrying the liability to the grave. He has done nothing since, except maybe helped the pub trade! The products are already simple, it is the bureacracy that is in the way.

  8. Perhaps a good place to start would be the dubious charging system to be employed with the NEST project. 1.8% ‘contribution charge’? I suspect if an IFA went out and sold that style of product a compensation claim would be along shortly afterward. Govt raids on pensions are close to criminal too, so it is hideous to see Miliband appointing himself the champion of the consumer after his party’s actions whilst in power.

  9. Hacked off – you are absolutely spot on. I compare the pension s industry to education – far too much constant meddling by career politicians who haven`t a clue what they`re talking about. This country is in a dangerous mess, and it is at a crossroads. If we take the wrong turn I believe there`s no way back. When will politicians ever listen to people who actually know what they are talking about. I despair for future generations, and am actively encourage my children to get out of the UK when they can.

  10. Lord Strummerville 20th January 2012 at 12:03 pm

    Peter Taylor – if you reverse the ACT Dividend claim you’ll also have to put Corporation Tax up by 2%, because that was the fiscally neutral arrangement in the 1997 budget.

    Charges are one thing, but ‘clarity’ is another – keep contracts simple (like ISAs) and people wil invest in them. Muddy the waters and start getting to clever-clever and they’ll run a mile.

  11. Do any of these idiot MPs remember stakeholder??? Charges were reduced and capped, advisers stopped advising on them, and no one bought them !! So what happened? Charges were increased and good value PPP’s were launched as an alternative. Pensions will not be bought off the shelf on mass, the public want advice when purchasing a pension – fact.
    But im afraid with RDR the FSA have killed off any chance of the average person being able to get this advice, commission is going , they wont allow factoring for regular premiums, so the adviser would have put on an extra charge of say £500/600 at least which would come out of the first years premiums.How is that possibly good for the consumer? Way to kill off a product FSA!!!

  12. Stones and glass houses come to mind with MPs. Maybe they should beforced into DC schemes and then watch which funds they choose to invest in

  13. We have failed to put together a decent lobby and PR front for ourselves. The banks did, in the 70s they charged 3.5% for mergers and aquisitions, they still do yet how many reductions has the savings industry faced from government.

    It takes 16 years to break even on a stakeholder pension for the providers. That also cries of a failure of our industry to get together and educate and lobby.

    Anyone can and does go on TV to lambast the savings industry and yet hardly ever do we see those at the top of our industry getting to a studio to put our side.

  14. the goverment or mps should pay pensions as the same as people who ,i get £55 cares allowance for my husband age66 who is a renal patiet he gets a state pension of£521 where people who work £200-£250 aweek and can enjoy there lives can the mps live this£?

  15. If Pensions were completely charge free people would STILL not be saving any more and would STILL come out with stupid comments such as “I don’t believe in pensions”. Charges are a red herring, an easy target for Politicians with no ideas, and absolutely no idea how pensions work.

  16. I wonder if Gordon Brown is one of the 48 MPs. Maybe Milliband should voice regret at the pensions ‘raid’ by his previous leader 12 years ago.

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