More Pension Crap

I listened to that and couldn't work out what the problem is. They say people aren't buying basic pensions because the small fees don't justify advisors actively selling them. Seems to me the main reason basic pensions fail to sell is because basic pensions aren't worth having, whatever the fee. Might as well bung small contributions in an ISA and let it fester safely.

Andrew McP

Seems to me the main reason basic pensions

The problem with most people is that they put their money into a pension then never look at it again until they retire and then find out something has gone wrong.

But if they put the money into an ISA, many of them are prepared to look to see how the investment is doing and move it if necessary.

Why do people think that a pension is any different to any other investment when it comes to fund performance?

Also, you say *let it fester safely*. Safely? Depends on the place the money is in. Maybe you're talking about a cash ISA. You could have a cash pension fund where it is just as safe, plus you get tax relief and you may well be able to put more than 3,000 a year in. I'm not making a case for pensions, but just to look at a point that seems to escape people.

Rob Graham

That's probably because they don't make it easy for you to move them.

This would be fine if the first available choice were "my current provider sucks so I want to move to another provider with no penalty" but the saver is usually presented with "my current provider sucks and they are advising me to give them some more to look after poorly"

tim

From one fund to another within the existing pension scheme, I mean. Quite easy to do and generally free.

Again, I'm talking about moving from one fund to another within the scheme. OK, you may want to switch provider as well, which can be more of a problem but not impossible and often cost effective.

My main point is that people rarely look at the pension arrangements once they set them up. If they don't ask they won't find out.

Rob

If you have that sort of scheme.

One could argue that a large up front fee was paid for someone else to do this. If Pensions are soooooo complicated that one has to employ someone at great expense to advise them which to buy, I think they are entitled to assume that the job was done properly.

tim

Sorry, forgot the word "cash". The relatively low earners the government's trying to encourage to take up pensions aren't going to be stashing away enough to take much in the way of risks IMO. Otherwise we risk another massive endowment mortgage style compensation claim in the future.

I think to attract the masses there needs to be something simpler and more guaranteed about the whole pension concept... say a form of cash ISA which you can contribute to tax free from your pay packet in the same way as a normal pension. Fiddling with fees on existing products isn't going to help. IMO anyway.

Andrew McP

I refer to money purchase schemes.

I agree that often a large upfront fee was paid - not so much now, though. However, the advice on which fund to use is only valid for so long and needs to be reviewed, much like the advice on why ISA to have. Maybe the original adviser should do it, but are many people bothered to have a meeting to discuss their pensions? Probably not, even if free. At the moment all we hear is slating of pensions and complaints from people whose funds have gone down. If they didn't like the stockmarkets why were they invested in stockmarket funds? Why not property funds, for example?

Please note that all my comments refer to pension *funds*, not the actual pension plan itself. (Which raises the question, how many people realise that a pension plan and a pension fund are not the same thing?)

Rob

They don't all have multiple funds to choose between.

tim

True. But a heck of a lot do.

Rob

True. But the big problem, I guess, will still remain - that of actually getting people to do it. They are generally too idle.

Rob

In message , Rob graham writes

HURRAH!

BOOOO!

HURRAH!!!

BOOO!

If you invest in a cash pension fund then after about 9 years of retirement you will likely have paid more tax on the annuity income than you will have had on the contributions.

Been to a footie match? Now put that camcorder away before you wear out the tape.