We recently got Scottish Widows' guide to contracting out (via personal pensions started before June 4, 2001) for the 2002/03 tax year.
Then we got another guide to contracting out, this one in respect of personal pensions started on or after June 4, 2001.
Then we got a third one, this in respect of stakeholder pensions although this one seems to bear identical age bands to the second guide. All figures are based on the assumption of standard commission (whatever that is for pensions these days) so presumably the age bands shift a little if the IFA takes something other than standard commission.
If standard commission is not taken, presumably, the IFA will charge his client a fee (each year) to advise him on whether he should remain contracted out and, if so, for how many years or whether he should now contract back in.
He will also outline just how the mechanics of contracting out work, the structure and workings of Serps and the SSP and how likely the assumptions on which his advice is based are likely to pan out in practice (extremely unlikely).
Just to confuse matters, various other insurers working on the same data seem to come up with different pivotal ages. Of course, the whole lot is undermined by the following important notes:
“We may change these assumptions in the future. Our assumptions do not directly correspond to those used for illustrations which are prescribed by the FSA [as if the FSA might have a better idea than anyone else anyway] or with those used by the Government Actuary in calculating rebate levels [with which the Government is constantly tinkering].”
Then, of course, we also have means testing on the way, so any entitlement to benefits under either Serps or the SSP will probably be denied to all but society's financial dreg ends anyway.
To my mind, only one message emerges with any clarity from this timeand money-wasting farce – get out now and stay out for ever because the only thing of which we can be sure is that the Government cannot means test out-of-reach money in your own personal pension.
Turning to Doug Brodie's letter in the January 16 edition of Money Marketing, he states that life companies like to think they know what IFAs do but that they don't. I agree. There is another group of people who do not know. In fact, they appear to have less idea of what IFAs do than life companies. Even more gallingly, we are forced to pay extortionate levies for their very existence, not to mention all those hefty directors' bonuses and sever-ance settlements.
The body in question is itself completely unregulated and even has statutory immunity from prosecution. Amazing. While we are on the subject, much speculation abounds over the pending early departure of Howard Davies from his post as top dog at the FSA. Is he jumping or is he being pushed?
My view is probably the former and that, if Sir Howard gave a candid reply to the question, he might well say that considering the material at his disposal, it would have been a minor miracle for anyone else to have done any better.
Unfortunately for the rest of us, the material in question (of whatever hue you feel inclined to accord it) remains firmly ensconced at Canary Wharf. And there is the rub.
WDS Independent Financial Advisers,