View more on these topics

Education is the answer to make people value pensions

Editor’s comment of the week

As a chartered financial planner with many years’ experience advising clients on pension policies, I agree with Stephen Gay’s comments in Money Marketing. Steve Webb perhaps needs to meet some of the individuals that I meet to see the reasons why they are not investing in pensions. High pension policy charges used to be an issue but this is no longer the case.

In my experience, the reasons why clients are reluctant to invest in pensions are as follows:

Scale: realistically, a fund of £100,000 will produce a pension of £5,000 a year. £100,000 takes a lot of funding and bear in mind this makes no allowance for the impact of inflation. The perception of clients is that they are beaten before they start and therefore do not want to commit.

Affordability: family budgets are being strained and there is little surplus cash available for investment. I find it frightening how many clients have no savings whatsoever other than perhaps a few hundred pounds in a current account.

Strings attaching: pension policies have a lot of strings attached to them and when explained (treating customers fairly), they are put off investing.

History: Maxwell, Equitable Life and other scandals live in peoples’ minds and make them very wary.

Education is the answer. I discuss with my clients how they might design a retirement income funding strategy. Typically, this might include pension funding, individual savings accounts, buy-to-let properties, downsizing the family home, the list goes on.

I believe my comments are the hard and painful truth and have no idea what the answer is but one thing is certain, it is not further reducing pension policy charges.

Andrew Johnstone

Chartered financial planner

Recommended

Barclays in offer for parents to pool income with children for loan

Barclays has launched a mortgage scheme which allows parents to help their children buy a property. The family affordability plan allows parents and children to pool their income when applying for a mortgage without the need for parents to be named on the property deeds. Barclays will conduct a credit score on all parties as […]

1

PruProtect slashes income protection cover premiums

PruProtect is reducing its income protection premiums by an average of 20 per cent for new clients following a review of its product range. PruProtect says it will calculate the size of the reduction for individual clients based on their occupation, age, whether they smoke, the term length and any waiver of premium option. It […]

21

RBS cuts over 600 jobs from financial planning arm

The Royal Bank of Scotland is cutting over 600 jobs from its financial planning service ahead of the RDR. The bank says it has taken the decision to reduce its financial planning unit in response to the RDR and the impact this will on the number of staff needed to deliver advice. RBS says while […]

2

US financial planner banned over £65m funds scheme

An American adviser has been disciplined by the US financial planning standards board for allegedly accepting £794,000 in payments for recommending unregistered investment funds. US website Financial Planning reports that Wisconsin based firm Wealth Management founder and former chief executive James Putman has been banned by the CFP Board of Standards from using the certified […]

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