Malcolm McLean comments on Labour Party’s statements about impact of pension fees and charges
Commenting on today’s statements from the Labour Party about the impact of pension fees and charges Barnett Waddingham consultant Malcolm McLean said:
“The question of large fees and charges on pension plans seems to raise its head with depressing regularity and is one of the factors that undoubtedly undermines trust and confidence in pension saving and the pensions industry as a whole.
“There is obviously at the very minimum a need for greater transparency in the promotion and sale of pension products to ensure that consumers are aware of exactly what they are signing up to and what the costs may be in both the short term and the long term. Some pension plans are clearer than others in that respect with with-profit arrangements probably being the most opaque and least well understood. Percentage figures can also be very misleading and charges can be better explained and understood in pounds and pence terms.
“With regards to costs it needs to be emphasised that fees and charges are only a part of the equation and that the level of contributions paid in and the investment returns obtained are as important – if not substantially more important – than the former in most instances. It is also a fact that the industry has done a lot in recent years to reduce the level of charges on pensions and modern plans are considerably cheaper and therefore better than older-style arrangements. Unfortunately many of these old plans are still around and can be cripplingly expensive to escape from given the high exit penalties that are built in to them. This is an issue that the FSA might want to look further in to with a view to enforcing the removal of such conditions where the plan has been in existence for a minimum length of time.
“Restoring public confidence in pensions by whatever means should be a priority for us all in the face of a growing savings gap and a need to stimulate pension saving for the long term good of the nation”.
For more information please contact Malcolm McLean
or Steph Gold