View more on these topics

Must try harder

At this time of year, many parents will be anxiously awaiting end-of-term reports for their offspring. Given the time and effort put into rearing the Sandler and Pickering reviews, I can only assume that the Government is similarly nervous.

Master Pickering has proved to be a serious underachiever as his work to date has been both predictable and incomplete. Master Sandler, however, has produced a comprehensive piece of work which proves that any suggestions that the conclusions were written in advance were quite obviously scurrilous comment without foundation.

The common objective of both reviews was meant to be the facilitation of greater self-provision by ordinary folk. What has been delivered is unlikely to produce anything that will achieve that objective.

Regarding Pickering, the Government has stated that it is not ruling anything out or anything in at this stage. Put it another way, this review has not produced any adoptable recommendations.

May I assist this Government without the need of another review. To put it bluntly, the low-paid can never save enough to generate the funds needed for security in retirement, especially if we accept that they are not in a position to invest in volatile markets. As an alternative, can I suggest that state pensions should be subject to means-testing and the money being allocated to promoting investing to the lower paid be diverted to the cost of providing these benefits.

Dumbing down defined benefits has no merit. After all, if the funding rate was the problem, the average contribution to defined-contribution schemes would be a lot higher than it is at present.

Reducing the number of pension plans to three for new investments is of little benefit if existing plans are left to be governed under the maze of current rules and regulations. This does not simplify matters, it merely increases the permutations to 18 from 15.

Meanwhile, the Sandler report has not understood that the stimulus for closing the savings gap is not simplicity or lower costs. The greatest reduction that could be achieved in this area would be obtained from the Government moving to means-testing for state pensions and making that fact crystal clear.

The target group for personal provision should be Middle Britain and not the lowerpaid. For this to be effective, we need to communicate clearly and without complexity. A form of matching contributions would also ensure that the reliefs were targeted on the individuals who would be able to take advantage and not just higher-rate taxpayers.

To be completely fair, the Sandler report does at least address the logistical problems of the DPS by introducing fees contingent on the sale of a product. This would remove the risk of VAT becoming another barrier if advice had to be separated from execution.

Taking CP121 and Sandler together, the banks have been given both a marketing opportunity and a major responsibility in the future prosperity of this country&#39s most vulnerable consumers. Given their inability to make wealth management work through a lack of margins just, how will they cope? It is clear that existing staff and methods will not be effective. Indeed, the redeployment of staff is at the root of the failure of bancassurance to date. New methods need to be found and simply rewrapping the old options will not do.

Perhaps the end-of-term reports for Masters Pickering and Sandler should read as follows. Pickering must submit more imaginative work and remember to answer the question asked, not the one he would have preferred. Sandler needs to remember that producing exactly what is expected of him is rarely as memorable as producing the unexpected. Both students may have to repeat the year if we wish to progress.

Robert Reid is principal of Syndaxi Financial Planning. He can be contacted via email c/o the editor at robert.reid@centaur.co.uk

Recommended

Standard Life Sipp&#39s in

Summing up, Boylan says: “Where there is a case fordrawdown with smaller funds, they will have to go elsewhere. Largefunds will probably go to specialist administrators and pay the feesdirectly. This is a good offering for the £100,000 to £500,000 type offund. Again, I should like to see discretionary portfolios on offercombined with a lifestyle […]

Misys seeking to grow value through flotation

Misys intends to float its IFA network businesses within two years, creating a self-contained entity comprising the five networks – Countrywide, DBS, Financial Options, IFA Network and Kestrel – and the software arm.Misys is known as a software business. We get discounted in the market for being a conglomerate so our vision is that Misys […]

&#39Many borrowers are using flexible mortgage features&#39

Nearly half of flexible mortgage holders have taken advantage of their features, with many overpaying their loans by up to 100 per cent a month, according to new research.The research by the Council of Mortgage Lenders and Office of the Deputy Prime Minister found that one in five borrowers have used the option to draw […]

Sarasin – Sarasin CI Income Portfolio

Wednesday, July 24, 2002Type: Unit trustAim: Income by investing in bonds, equities and cashMinimum investment: Lump sum £2,500, monthly £100Place of registration: GuernseyInvestment split: Bonds 70%, equities 20%, cash 10%Yield: 4.5-5%Isa link: NoCharges: Initial 4%, annual 1.25%Commission: Initial 3%, renewal subject to negotiationTel: 020 7246 0430

Converting pension savings to a retirement income…

Since last year’s reforms to pension legislation, a significant number of retirees have chosen income drawdown over purchasing an annuity. Income drawdown is more flexible than an annuity. However, it also increases the likelihood that individuals won’t be able to maintain their income throughout their lifetime. In this short video, we explain the risks that […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment