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Cafe society has taken savings off the menu

According to the recent report by the Pension Commission, the need to incentivise people to save and the cost of advice appear to be incompatible.

The report also recognises that most people need to be motivated to save.

After a working lifetime, if one person has a given sum for their retirement and the other has none, who is better off? The answer you might say is self-evident – the one who has the money. Quite so.

In the early 1970s, like many others, I was persuaded to invest in a whole-of-life plan. Inevitably, a few years later, I needed every penny that I could find for the deposit on a house. The life policy was cashed in for somewhat less than the contributions.

Was I annoyed? No. The point is that it was there to be cashed in. If I had not been persuaded to save in the first place, I probably would not have had the money.

Instead of being invested in high-charging investment contracts, today&#39s potential savers are spending on such essentials as branded coffee, expensive haircuts and acrylic nails. God help us.

The effective charge on such ephemeral consumer purchases must be around 100 per cent. Perhaps an ombudsman should investigate.

The saying “You get what you pay for” could be paraphrased as “If you do not pay, you will not get” -and that is exactly what will happen to advice.

Forget 1 per cent. That is a red herring resulting from misguided reports such as Myners based on huge occupational schemes here and US 401(k) profit-sharing plans with many thousands of members.

US employers&#39 schemes with single and low doubledigit membership pay substantially more. But they have members.

David Strange

Managing director,

Consultis,

Sevenoaks, Kent

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