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Ed Miliband calls for 1% pension charges cap

Ed Miliband Labour 480

Labour leader Ed Miliband has heaped more pressure on the pensions industry by calling for a 1 per cent cap on charges.

According to the Guardian, Miliband (pictured) told delegates in Manchester that pension companies take “thousands of pounds in hidden fees and charges” from retirement funds.

He said: “What’s been happening is while you were saving, the company which was supposed to be helping you, the company you trusted, has actually been taking thousands of pounds out in hidden fees and charges.

“If we win the next election, we will make sure that no pension company can take too much out of your pension. A strict cap on pension fees.”

He described the measure as the “first shots in the all-out attack I want to launch on the way the rules of our economy now appear to be stacked against you”.

This is not the first time Miliband has targeted pensions this year. In July, the Labour leader pledged to tackle the “massive, massive issue” of high charges.

At the time Miliband was widely criticised by the pensions industry for “scaremongering”, while pensions minister Steve Webb accused him of attempting to “stir up cheap headlines” over charges at the expense of pension customers.

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Comments

There are 34 comments at the moment, we would love to hear your opinion too.

  1. What a novel and groundbreaking idea!

    Why has no-one tried this before!?!

  2. Shouldn’t he start with the new scheme the Government have introduced first?

    He could deal with the ‘hidden’ effect of the bid offer spread on the NEST scheme and get the overall effect of those charges below 1% first.

  3. Lets have a regulatory cap at the same time Ed.

  4. Perhaps we could call it Stakeholder 2?

  5. It just goes to show how out of touch that guy actually is. Does he understand the basics of economics at all ? Probably not as he is Labour of course…silly me.

  6. This is so depressing.

    Have his advisers been hiding somewhere and not noticed that, advice costs aside, charges have been well below 1% for some years now.

    As usual, a stupid politician trying to jump on a bandwagon that long since departed.

    Would his brother, an altogether more capable fellow, have made the same mistake?

  7. But Nest charges 2.1%? 1st October 2012 at 9:53 am

    Doesn’t New Labour’s own pension provider, Nest, charge customers 2.1% for a year? (1.8% contribution charge plus 0.3%). Or does the proposed 1% cap only conveniently apply after the Nest RIY falls to less than 1%?

  8. The truth about charges is far from the perception by Mr B!
    Charges have been specifically declared in the body of KFDs and Illustrations for years now and are specific to each providers contracts.

    Stakeholder pensions failed to inspire the consumer or the advising community as the value of funds is not specifically related to the charging structure it is more important to see fund performance exceeding expectations rather than concentrate on an attitude more akin to “Never Mind the Quality, fell the Width.

    Our political and regulatory masters have effectively ruined a thriving industry with over concentration on such issues, over regulation making it uneconomical to offer pension planning advice to anyone paying in less than £100 per week (net) and quite frankly haven’t a clue as to how to fund the savings gap, so they introduce a compulsory pension scheme (NEST) that has higher charges than most other schemes, limited investment portfolios and is currently not transferable.

    Your could not make this stuff up, it is in reality the stuff of nightmares, an industry governed by incompetent regulators, who have never had to deal with clients, nor who have the same level of knowledge or qualifications that even the most basic IFA has had to achieve and there is no system in place to rectify that.

    We are then tasked with funding via the FSCS for the few idiots that sell rubbish just to make a buck, which fee charging will not change and then burdende with the FOS

  9. LMAO. I clearly have been working in another country the last 26 years. Who advises these people? Aliens?

  10. Wouldn’t it make sense to fix the failing state pension provision first, before tinkering with the edges of privately funded planning.

    …..and whilst you’re at it Ed, focus on the real issues that will drag UK plc into profit

  11. What about teh millions stolen in tax from pension funds, following Gordon Brown’s robbery!

    The N.E.S.T has agreed charges of 1.8% initial charge, and a 0.35% annual mangement charge. This is a governement sponsored scheme, with higher than 1% fees!!

  12. ken170647 youtube 1st October 2012 at 10:13 am

    This lad’ll go far! What a brain! What an intellect!

  13. WHAT DO THESE GUYS DO FOR A LIVING. STAKEHOLDER WAS LAUNCHED ON THIS BASIS AND MOST MODERN PENSION PLANS HAVE LESS THAN 1% CHARGE. wHAT A WASTE OF TIME.

  14. Easy popular words from the labour leader. Stakeholder pension charges killed pension savings because no one was getting adequately paid for explaining and selling concepts of forward planning. Companies were losing money by offering them and hence competition within providers dropped away. Instead government sponsored nest scheme together with money advice service is costing millions of pounds. it’s time politicians started thinking about issues and doi g what’s best for country rather than what they think makes them popular.

  15. Using Civitas data the cost of the Gordon Broon tax raid is equivalent to a 0.48% pa charge on pensions and ISA’s. Talk about rip off charges.

  16. Q: Will this man ever be Prime Minister?
    A: No
    Q: Does it matter what he says or thinks?
    A: No

  17. Isn’t it wonderful to be able to demand things when you (Ed M.) don’t have to suffer the results personally! This is a bit like a Zimbabwean promise of free farms to everyone who votes for Mr Mugabe (we all know what a resounding boost to that economy that has been – NOT)
    These people seem to be saying “make the demand / promise and to hell with the consequences; let’s get the popular vote…?”

  18. The greasy slimeball is just touting for what he thinks will be a vote-winner. However, sensible, rational folk will recognise that saving the British taxpaying public money was the last thing on his mind when submitting his expense claims.

  19. this is incredibly dangerous stuff. A 1% amc contract is better value than NEST for the first 5 years, so no one retiring within 5 years should be joining NEST according to his logic.

    The sad thing is that his party brought in NEST and Stakeholder and now he is schizophrenic about which one to adopt

  20. And this from the genetically modified offspring of a Labour Government which raided the National Pension Fund Estate of tax relief on the share dividend?

    It would be comical if it were not so breath-takingly hypocritical and incompetent.

  21. Not fit for purpose 1st October 2012 at 11:36 am

    It would appear that studying PPE at Oxbridge followed by a ‘career’ in public affairs or MP bag carrying is not sufficient preparation for running this wonderful old country of ours.

  22. Sigh…… I read an article in the Times on Sunday scaremongering about ‘7% annual charges’ which, in the detail was actually referring to capital units.

    This constant drive to generate fear and mistrust in Financial Services is tiresome. Yes there are issues, but some broad stroke comments are destructive.

    Is Nescafe a rip off compared to own brand coffee simply because it costs more and doesn’t disclose how its RRP is reached?

    Consumers need to be engaged about the importance of financial planning and how value rather than cost is important.

    If a consumer wants a pension plan with a 1% p/a charge – they can already have one – in fact for MUCH less than that AND they’ll have access to many hundreds of alternative funds as well.

    If they want to receive advice… they can do. But that will result in a cost.

    If they want to invest in funds which may cost more but may also provide a higher longer term benefit, they can do.

    They have choice and options…. placing a cap simply removes them.

    Whilst costs are important and their transparency more so – imposing a ‘cap’ does nothing to aid transparency however it will essentially restrict the market and also client choice – particularly where the charge for advice and the cost of the investment are unrelated.

  23. This just proves politicians do live in a totally different world to the rest of us along with the FSA

  24. Can we please have a cap on the cost of politicians

    …………and even better, their pensions!

  25. Andrew Pritchard 1st October 2012 at 3:16 pm

    Hi next step is to roll out a really cheep scheme similar to the teachers, doctors, and civil servants. no upfront charges, no greedy advisers sponging off their clients and no investment charges or risks.
    Has a special name… He just cannot remember what it is but his fellow MP’s think that they are great.

  26. Maybe there should be cars that cost 1% a year to run as well.

    If it was so easy why is NEST costing more than this and has to be funded by the taxpayer?

  27. Soren…
    are your sure? 10 points ahead in the polls, Conservatives at their apogee could only get a hung parliament. what’s going to improve for them in the next 3 years? Get used to the idea of a Labour government again in some form.

  28. Ever since he won the party leadership I have had my doubts that he is of the right calibre to run the country.

    These doubts have just been confirmed.

  29. Really? have the Labour people really put this man at the forefront of their party? I thought the same before this recent idiotic policy proposal, Now… I actually want to go and shake every Labour member by their Rolex whilst shouting expletives
    into their cauliflower ears. What an absolute moron

  30. It is quite funny that the party that spends other peoples money (mine and yours) like water then preaches to the private sector about how it should run its business.

  31. His parents must be so proud.
    His brother must be LHAO!

    When’s it gozo’s turn?

  32. Wasn’t it Gordon Brown who raped UK pension funds in 1998? I think that this was in excess of 1%? Might be easier to remain silent and let everyone think that you are a fool ED, rather than spout off and remove all doubt?

  33. To be fair I’m trying hard to think of how Mr M’s comments might make sense – certainly don’t in respect of new arrangements. Could perhaps make sense for old “zombie” funds….but then as much as I hate what some of those impose, it’s a pretty slippery slope to say “we’ll tear up the validity of existing contractual arrangements”…..

  34. Bryan McAuliffe 8th October 2012 at 2:12 pm

    This man is dangerous, and there are people out there who are listening to him. One of the pros of politics being too involved with education is that you can get away with these politic comments and still earn brownie points out of it.

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