For all those who thought the RDR would not affect legacy, the reality, post-Hogmanay, is giving those who see the big picture some sleepless nights.
We all have a duty not to destroy public confidence in the savings process and those who do are not commentators they are parasites. That is not to say that charges should not be adjusted to a more acceptable level.
The NAPF has been making a lot of noise about the “danger” of contract-based pensions when the “safer” option of trust-based should, in its opinion, be the default choice. The bulk of group personal pensions are under trust, admittedly a master trust. But wait, the NAPF trust schemes are under a trust that can cover more than one scheme – sometimes called industry wide. Are they not eerily similar to a master trust?
And Nest is under trust. Or is it? It will not accept nomination forms so death benefits will go into your estate, and if you are not married tough luck because your partner will not get a bean.
Why? you ask. Nest told me it was too difficult. Maybe that’s an excuse we could use with the regulator in “we would have done that but it was too difficult”. Would that work for us? I don’t think so.
Back to these great trust based schemes so loved by the NAPF. I know of several such schemes where early leavers find all charges, theirs and their former employers taken from their account.
This has the effect that the amount on exit could be exhausted before they even get to retirement. So before the NAPF cracks open the champagne, Joanne and her troops should do some due diligence.
It is so much easier to fire sound bites than do proper research but when the public’s attitude to saving is at stake a couple of deep breaths would be in order.
The recent figures published in Money Marketing showing the free-fall of DB scheme numbers is the real driver behind the NAPF’s push but the ABI needs to stop sitting on its hands and put matters in context.
The country needs a single association for investment providers as fragmentation leads to this corrosive debate and if Steve Webb was to help deliver this, it may just unlock many of the issues we face.
We recently (my own planning firm) asked Phoenix why there was a penalty on transferring a pension plan invested in a managed fund. When we got no response we passed the details to Money Marketing which spoke to the provider. We then received a letter from Phoenix saying they told the journalist and implied he would tell us!
The idea shared by the zombie companies is that they do not need to provide service if it does not suit them. This is a farce and the FSA and its successor needs to explain TCF to these jokers.
To date Phoenix has not produced any evidence that it has the power to take such a penalty; it is like the service charge at a restaurant where the service has been dreadful.
The attack on bad value contracts is long overdue I wonder if some of these companies might start to realise that profits could be a thing of the past.
In short we need to evolve and that is not just advisers. Providers and investment houses have for too long seen themselves as impervious to change phase and that is almost over.
After all nothing is forever apart from some market value adjusters!