You can’t help but have read the governments recent headline grabber for the pensions industry – capping charges around the 0.75% mark. The rational seems to be that if the government limits the amount firms can charge for a pension then we’ll all suddenly save vast amounts of money for retirement and the savings gap will slam shut.
Many years ago stakeholder pensions were launched -they have caps on charges- 1.5% dropping to 1%, low contribution levels and according to those in Westminster would restore confidence in the market and encourage a savings culture. The result is that we still have a huge shortfall in retirement savings and a generation that may never actually be able to afford to retire.
We absolutely believe that anyone saving, investing or buying anything should have a full understanding of what they are paying for and how much it’s going to cost them. But cost is only one small part of the equation – someone receiving no advice, no service and no on-going relationship would surely expect to pay less than someone who would meet with an adviser two to four times a year, every year thought to their retirement?
Our message to the government – Create the framework and regulation for firms to operate in – make things clear, make them simple and then stay out. The more successive governments fiddle with the savings and pensions industry the more they erode confidence in it and make planning for the future almost impossible.
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