Whose (mis)taking my pension?

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In a stunning piece of forensic journalism, the BBC have been reading personal pension disclosures and discovered that someone paying £120,000 over 40 years into an HSBC all singing and dancing personal pension could pay the best part of £100,000 in charges for the privilege. 

Thanks to Jennie Kreser for bringing this to the attention of our lunch group yesterday and correctly identifying structural weaknesses with auto-enrolment and NEST that unreasonably excite expectations of a prosperous retirement for all 

Thanks too to Mark Rowlinson and Susan Anyan for the maths- yes – if you get 7% growth per annum you get a big pension pot in today’s terms and with 1%pa + charges the nominal costs between 2040-50 will appear high in today’s terms. 

Thanks to Charles Tatham for pointing out that by using a less elaborate L& G personal pension, the costs could be reduced by 40%, 

Thanks to Chris Brown for pointing out the value of group personal pensions that can bring AMCs on personal pensions down by 60% of the RRP quoted by HSBC 

Thanks to Tony Woodward for helpful thoughts about the likely impact of the RDR which will require independent advisers to concentrate their work on high net worth clients effectively abandoning many to inappropriate pensions offered by the banks. 

Thanks to Owen Walker for keeping us temperate (good journalists like Owen listen!). 

Thanks to Des Hogan for moving the debate on to NEST and the value it brings both in terms of charges and inclusiveness. 

Thanks to Ben Mulroney for his insights on investment strategy– in particular the cost of providing appropriate pension strategies in a DC environment 

Thanks to Emma Craig and Holly James for providing valuable input from Generation Y on their buying priorities debt reduction, property ladder stuff and ISAs

Thanks to Richard Hayes for his unsuspected attendance and excellent contributions. 

So what did we conclude? 

  1. Sensational reporting is not helpful in getting people to save for retirement
  2. There is a wide range of charging structures between personal pension providers
  3. There are substantial discounts that can be created through group personal pensions
  4. For all its faults NEST will deliver lower price pensions to part of the market stakeholder pensions could not reach
  5. That the pensions landscape will change post RDR and that the banks are seen as predatative in their approach to pension sales.

Such a truncated and dislocated report cannot do justice to what was a lively and informed debate. We’d urge all reading this to join the Playpen and add to our limited but growing awareness. 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Whose (mis)taking my pension?

  1. Pingback: Who’s also (mis)taking my pension? « Compound Interests

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