View more on these topics

Robert Reid: The senseless debate on pension charges

Rob-Reid-MM-Peach-700.jpg

One of my favourite books is David Niven’s The Moon’s A Balloon, the first part of his autobiography. It reveals the inner workings of the film industry and the excessive focus on one element (appearance) over all others.

This ongoing fixation on charges concerns me, as does the benchmark of the AMC, which is rarely the sum total of all charges. 

We all agree charges in the past were too high but then the cost of distribution was higher too. I remember telexing for quotes and then having the response typed up. This sub-process involved three or four people and the costs had to be met from somewhere. 

As the providers moved costs to the IFA (we could print the quotes and cover the costs of doing so) we received a token benefit but in reality just made the provider more profitable and our firms less so.

Pensions minister Steve Webb  is still to convince certain parts of the Treasury of the need for a charge cap. He should have realised the pensions turf war between the Government departments goes back a long way.

When I started in pensions, we had the HM Revenue Prac-tice Notes which the DHSS (DWP predecessor) then trumped via legislation which took precedence. 

There is no doubt that auto- enrolment is too complicated and that adds to costs. The DWP’s love affair with upper and lower limits have no beneficial effect unless fines on employers are seen as successful outcomes.

What this latest spat underlines is the need for an independent body to review pensions and the state’s involvement in their provision or design.

Ministers have only five years to bring in change and inevitably at this time in the Parliamentary cycle thoughts turn to the general election. Even if there is political will, there is rarely time to complete what is truly required. In any event, the two major sources of costs remain – regulation from the DWP and the FCA. 

In David Niven’s second instalment, the story that provides the book’s title, Bring On The Empty Horses, relates the difficulties the director had with the English language on the set of The Charge Of The Light Brigade. Wanting to see stray horses wandering through the battle, Michael Curtiz (the director) told the wranglers to “bring on the empty horses”. When Niven cracked up laughing, he responded with: ’You people, you think I know f***ing noth-ing; I tell you: I know f*** all”.

That last quote sums up how I feel about the endless discussion on charges, with commentators who clearly have no real knowledge talk-ing about levels of charges with no idea of the cost of advising/reviewing/providing a pension.

Let’s all take a breath and focus more on outcome; after all, a cheap pension with inadequate contribution levels is no use to anyone. The sooner all these “experts” find that out the better. We need to make people realise that “saving more tomorrow” is a great concept but doing it now is even better.

Robert Reid is managing director at Syndaxi Chartered Financial Planners 

Recommended

Paul Matthews Standard Life

Standard Life warns employers over extra auto-enrol charge cap costs

Standard Life is warning employers they could have to pay extra pension fees if the Government presses ahead with proposals to cap auto-enrolment charges. In October, pensions minister Steve Webb set out plans to cap fees on auto-enrolment default funds at between 0.75 per cent and 1 per cent. The reform was originally due to […]

Skipton-Building-500x320.jpg

Skipton advice arm returns to profit but refunds further £1m in charges

Skipton Building Society’s financial advice arm returned to profit in 2013 but set aside a further £1m related to charges refunds. The annual results, published last week, show that its three advice firms – Skipton Financial Services, Pearson Jones and Torquil Clark – made a pre-tax profit of £3.9m last year compared with a loss […]

John-Cupis-MM-Peach-700.png

John Cupis: Mortgages are also covered by FCA inducement rules

The recent FCA final guidance on inducements and conflicts of interest (FG 14/1) has certainly caused a stir and led to action from providers and distributors alike. The paper is clearly aimed at the retail investment advice market in the wake of the RDR, but as I go around the mortgage market I have heard […]

Business-Handshake-Finance-Deal-700.jpg

Just Retirement recruits head of public affairs

Former Association of British Insurers policy adviser Ben Stafford has joined Just Retirement as head of public affairs. Stafford, who was also previously head of policy at the Association of Mortgage Intermediaries, will lead public policy initiatives for the enhanced annuity provider. He joins Just Retirement from consultancy firm Cicero, where he was director of […]

InFocus - thumbnail

In Focus — February 2015

Jelf Employee Benefits looks at the issue of paying anaesthetist fees when the patient had no chance to discuss or agree to them prior to care; and provides recommendations for avoiding this scenario.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Agree completely. When will the politicians learn that the more they fiddle and interfere the more likely people are dis-inclined to save, particularly in Pensions where the constant changes have led to the younger generation in particular opting for alternatives such as ISA’s which is fine in itself but lacks the discipline that can come through savings via a pension arrangement.

    The politicians should also get off the mantra of knowing the price of everything and the value of nothing.

  2. Test Comment MM FF 16.42

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