View more on these topics

Anything but a pension…

I read the other day that the Department of Work & Pensions is to release its requirement for money-purchase providers to give policyholders a meaningful illustration of their future pension entitlement.

It will replace the current PIA-based projections…with a single growth projection of 7 per cent eroded by 2.5 per cent inflation.

If we reduce the remaining 4.5 per cent by another 1.5 per cent in respect of charges and point out to the scheme member just what the options at retirement will be for three-quarters of his accumulated fund, I think we can predict with a fair degree of confidence that most people will either put their money in a building society, under the mattress, blow it or buy a second property. Anything but a pension.

Already, some of my clients are saying exactly that. The only reason they bother to participate in their employer&#39s retirement benefits scheme is because of a decent employer contribution.

Before Alastair Darling and his supporters start leaping up and down and claiming this to be a victory for those in favour of compulsion, it is important to emphasise that these people do not actually have any faith in their employer&#39s pension scheme. They are making other arrangements of their own to ensure financial comfort in retirement.

The only basis on which they participate in their employer&#39s pension scheme is that they may as well and that the eventual benefits when they retire may provide a bit of extra income as well as a tax-free lump sum, most of which will have been funded by their employer&#39s contributions.

That is not the same as believing their employer&#39s pension scheme to be a good thing and anyone who tries to argue so is, very probably, a politician. Meanwhile, the mess grows both thicker and deeper.

Julian Stevens

WDS Independent Financial Advisers, Bristol

Recommended

Fee-based advice will hit clients

It is a very sad day when, having practised for 33 years as an IFA and having done so without a fee being paid by our clients (without a murmur of discontent from a very large client bank), potential legislation is being suggested to force me arbitrarily to charge fees if I wish to retain […]

LeggMason and Premier lose star managers

LeggMason and Premier Asset Management have become the latest investment houses to be hit by high-profile departures, with the resignations of fund managers Chris White and Peter Webb respectively.White, who runs Legg Mason&#39s monthly income and UK income funds, is leaving to head Threadneedle&#39s UK equity team.Unicorn chief executive Webb has resigned from managing Premier&#39s […]

Long delays as NU struggles with overload

Norwich Union appears to be creaking at the seams in coping with new business levels, with IFAs recounting horror stories of dealing with the life office.IFAs say they are experiencing severe backlogs of up to six months with some still waiting for policy documents for stakeholder applications sent in October last year.But NU&#39s problems seem […]

Cazalet slams FSA &#39threat&#39 on Equitable

Influential analyst Ned Cazalet says he could soon rate Equitable Life insolvent and has attacked the FSA for using scare tactics to stop IFAs advi-sing clients to transfer out of the troubled life office last year.Equitable is suing 15 exdirectors, including Christopher Headdon, John Sclater and Alan Nash, and is also suing former auditors Ernst […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com