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Labour turns the screw over ‘rip off’ pension charges

Labour Shadow pensions minister Gregg McClymont

Shadow pensions minister Gregg McClymont has warned Labour will force the pensions industry to improve disclosure of costs and charges if the party is elected to power in 2015.

In an interview with the Financial Times, McClymont says savers risk being “ripped off” if providers fail to tell them the costs associated with pension saving.

He says: “If the pension providers don’t start telling people what they are really charging them, savers risk being ripped off. If they haven’t started doing this by the time we get into government, we will force them to.”

The industry has already taken steps to improve the disclosure of costs and charges.

In January, the Association of British Insurers proposed a set of new standards designed to give savers clearer information on how much money is deducted from their pension pot each year in costs and charges.

So far 14 of the UK’s largest pension providers have signed up to the standards, which must be implemented by the summer of 2014 for schemes newly established for auto-enrolment. Older workplace schemes have been handed an extended deadline of 31 December 2015.

The Government has also set its sights on pension charges, with a consultation on setting a charge cap for auto-enrolment schemes due to be published in the autumn following an investigation by the Office of Fair Trading.


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There are 18 comments at the moment, we would love to hear your opinion too.

  1. Will labour tell auto enrollers that they may not get back, pound for pound, what they pay in, depending on their age and the cost of charges, when they enroll?
    Providers should list and highlight the cost of regulatory charges within pension charges.

  2. Well with all this positive energy from our MP’s, Government and regulators about the financial services industry, no wonder consumer confidence is bursting through the roof ?

    And Keith Richards bangs on about the damage we do when we are negative ?

  3. Politicians are wonderful and talk a lot of sense. They never ever seek to rip off the British public. They are in power to make a difference and for the common good.
    They are so socially minded, they would work for free on our behalf.
    Is that positive enough for you Keith.

  4. Im an adviser and i cant actually find these so called Rip off charges !!! Where are they ??
    And im pretty sure a Key features document does actually tell you exactly what charges you will pay. Labour with its head up its bottom yet again i see !!

  5. I am absolutely behind Gregg’s statement…if your pension scheme has a TER of 3%pa then you are being ripped off. If it is below 1%pa then maybe not so much so.What we are missing is that the headline story about stopping the rip off pensions involves stopping a very smaller % of what has been sold since 2001 when Stakeholder was introduced. Why not concentrate the governments efforts on better outcomes at retirement and improving annuity rates, increasing competition through promoting OMO’s as I feel the rip of pension is already a dying breed… but the rip off annuity rate that is a different story!!!!

  6. We have unemployment that isn’t moving. We have housing in short supply and out of the reach of most below the age of 35. We have businesses unable to borrow to compete with global competition. We have queues of people unable to get timely care in hospitals. We have a shortage of quality teachers to help our children. We have an environment that will implode unless we tackle the years of neglect………and this buffoon thinks pension charges are at the centre of salvation !

  7. I presume those paying voluntary NI now losing our or those who didnt contract out no wait they were their mistakes!
    Mc Clymont needs to realise that DB schemes were just as bad with LEL deductions so the lower paid who were early got little in real benefit but paid nonetheless.
    the trade union movement who stood by and let 16% contribution rates drop to the magic 3+3%.
    Noise is the only thing Ed and his team ever create lets hear how he intend to engage people thats the real issue.

  8. Remember it was Labour & Stakeholder that removed distribution costs and forgot that this would also remove distribution. The number that matters to the individual investor is the net performance.

  9. This from Labour, the party that thought it would be a good idea to help savers plan for retirement by taxing dividends in pension funds! how much would that add to a reduction in yield figure if it was taken into account?
    …..’by the time we get back in to government’
    don’t you mean if the british public is ever dumb enough to vote you idiots back in…..?
    (oh wait a minute……..maybe we are!!!)

  10. Those who can, do; those who can’t, teach.

    A man whose entire working life has been spent either studying history in a university or teaching history in a university, is clearly the person needed to be a pensions minister.

  11. The obvious starting point will be NEST, likely to be the poorest value for money scheme available, and introduced by a Labour government.

    Then take away the excessive costs of regulation and you have lower charges, take away advice and mediocrity will be the standard. Long term investment performance is the biggest factor which determines the final outcome.

  12. And yet they never actually state who is actually ripping off savers or come up with actual evidence of this.

    Or maybe he is referring to NEST.

  13. The Richard Bishop Fanclub 19th August 2013 at 1:38 pm

    This berk makes Steve Webb look good!

  14. It’s called propaganda to create an evil monster that you can blame for all the ills in financial services plus deflecting attention away from your own failed policies. Let’s just list some of Labour’s failings within the pension market.

    1: The super regulator that failed so spectacularly e.g. FSA

    2: Taxation of pensions by Gordon Brown.

    3: So-called simplification of pensions making them so confusing that the general public have lost faith in them.

    4: Super low interest rates due to their lack of controls on bank lending resulting in the banking crisis which gave the UK all time low interest and super low annuity rates robbing millions of individuals of their liveable pensions income. If we want to have a discussion about charges then surely we have to have a discussion about annuity rates and the link to Labours mismanagement of the economy.

    5: The continual lack of financial education within the UK and reliance on the UK economy on consumer spending which in traps millions of people to debt. Labour’s policies not only encouraged the rise of private debt it has also resulted in millions not having enough to afford to purchase their own house or save adequate monies over their lifetime to have a reasonable pension.

    Finally, I would like to know what he means by hiding charges after all financial advisers now get a signed fee agreements in advance of clients taking out pension plans. Plus clients are fully informed of the charges by key features documents illustrations and suitability letters. Has he not heard of RDR!!!!!

    Unless he’s talking of the execution only market that Labour have allowed blossom with little or no checks – I therefore think that the Labour Party should be looking closer to home for people to blame rather than just coming up with meaningless propaganda.

  15. She who shall remain nameless... 19th August 2013 at 4:52 pm

    Is the Richard Bishop fanclub really just Richard but under a psuedonym to make himself look popular?

  16. The only reason Stakeholders didnt work was because you guys couldnt get decent commission out of them…Much better putting those small pots into SIPPs, justifying the fund choice as the main driver…

  17. “The only reason Stakeholders didnt work was because you guys couldnt get decent commission out of them…Much better putting those small pots into SIPPs, justifying the fund choice as the main driver…”
    There are greater reasons for Stakeholder Pensions not working than advisers not being paid very much for selling them. To answer your point though if you have rubbish funds with bad performance that only cost 1% or you have excellent funds with brilliant returns for 2% what do you think is better? It seems pretty obvious to me. P.S. I’m not an adviser but I understand Mathmatics and Labour should never have taxed retirement funds.

  18. Meantime, in the real world ,we face the looming problems for AE next year as alternative providers will decide small employer schemes are not profitable. NEST will be the only option for most,with its high relative charge and limited investment and retirement options.But given this convoluted concept was given birth by the last ,and discredited ,Labour government ,its no surprise they want to focus elsewhere and persuade the public hat the issue is charges by providers and not the complete and utter mess created by them as legislators. McClymont shows his complete mis understanding of the industry,but tats hardly surprising given he lives in the world of final salary schemes that his parties supporters can largely only dream of now after 13 years of his parties “war” on our industry!

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