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