Panorama - Pensions Charges

Loughton_Monkey

Oh dear!

Don't you sometimes get the impression that the BBC just aren't cutting it any more?

Here was a relevant topic, probably justified. I give 100% support to the view that UK Pensions are over-charged. We pay too much in charges and commissions, that's for sure.

But what's wrong with the BBC? Quality of staff? Complacency that they are recession-proof because of the license fee. Can't understand the issue, and therefore fill the program with relatively inane and irrelevant headline figures?

Their 'headline' camparison was a £200 a month pension for 40 years, growing consistently at 7% per annum. Well at 7% per annum, money 40 years down the road is worth 15 times what it was 40 years previously. Why compare 99,900 pound notes with the 120,000 pound notes paid in, without any reference to the true value of each pound note at any period in time?

And as for the poor blind man, well!

Typical BBC. Find a blind man who has been conned, and "That's television"!

Don't get me wrong. Mis-selling an honest blind man into laundering his pension fund offshore, and creaming 10% off the deal is terrible. The guys who did it should be lined up and shot! I'd happily pull the trigger. But that's a different debate! They were supposed to be talking about over-charging by Pension Providers.

Equitable Life doesn't enter into either. Again, that's a whole different story. [Ironically, Equitable Life was one of the lowest charging companies you could get - until they made the dramatically fatal error of guaranteeing annuity rates].

So. An opportunity missed. I don't think "Joe Public" is any the wiser after the program, other than they will tend to say "that's a good reason not to invest in pensions." And go and spend it all down the pub.

Come on BBC. Stick to light entertainment. For so-called 'investigative journalism' you have about as much intellect as Pugwash!

sunil1234

Loughton_Monkey wrote: »

Oh dear!

Don't you sometimes get the impression that the BBC just aren't cutting it any more?

Here was a relevant topic, probably justified. I give 100% support to the view that UK Pensions are over-charged. We pay too much in charges and commissions, that's for sure.

But what's wrong with the BBC? Quality of staff? Complacency that they are recession-proof because of the license fee. Can't understand the issue, and therefore fill the program with relatively inane and irrelevant headline figures?

Their 'headline' camparison was a £200 a month pension for 40 years, growing consistently at 7% per annum. Well at 7% per annum, money 40 years down the road is worth 15 times what it was 40 years previously. Why compare 99,900 pound notes with the 120,000 pound notes paid in, without any reference to the true value of each pound note at any period in time?

And as for the poor blind man, well!

Typical BBC. Find a blind man who has been conned, and "That's television"!

Don't get me wrong. Mis-selling an honest blind man into laundering his pension fund offshore, and creaming 10% off the deal is terrible. The guys who did it should be lined up and shot! I'd happily pull the trigger. But that's a different debate! They were supposed to be talking about over-charging by Pension Providers.

Equitable Life doesn't enter into either. Again, that's a whole different story. [Ironically, Equitable Life was one of the lowest charging companies you could get - until they made the dramatically fatal error of guaranteeing annuity rates].

So. An opportunity missed. I don't think "Joe Public" is any the wiser after the program, other than they will tend to say "that's a good reason not to invest in pensions." And go and spend it all down the pub.

Come on BBC. Stick to light entertainment. For so-called 'investigative journalism' you have about as much intellect as Pugwash!

yep i agree, just watched it off the sky planner. it is a shame when programmes do this and scare anyone off who might be bordeline for starting a pension. Still, the Beeb could be in bed with the governement again and doing this so people dont save and spend the bloody economy out of recession as they need to get rid of this trillion pound debt!

At least ITV doesnt bother and just makes bloody period dramas and resurrecting old Bill cast members:mad:

Bring back footballers Wives:rotfl:

Loughton_Monkey

Footballer's wives?

Now there's an expensive item if I ever saw one!

dunstonh

Don't get me wrong. Mis-selling an honest blind man into laundering his pension fund offshore, and creaming 10% off the deal is terrible. The guys who did it should be lined up and shot! I'd happily pull the trigger. But that's a different debate! They were supposed to be talking about over-charging by Pension Providers.

That sort of transaction is typically done by unregulated people trying to catch greedy consumers who think they are on to a shortcut to riches.

Nothing to do with regulated pension business.

Equitable Life doesn't enter into either. Again, that's a whole different story. [Ironically, Equitable Life was one of the lowest charging companies you could get - until they made the dramatically fatal error of guaranteeing annuity rates].

Not exactly topical is it. The issues around Eq Life are decades old and that sort of thing cannot happen again with modern pensions as you wont find guaranteed annuity rates.

So. An opportunity missed. I don't think "Joe Public" is any the wiser after the program, other than they will tend to say "that's a good reason not to invest in pensions." And go and spend it all down the pub.

Come on BBC. Stick to light entertainment. For so-called 'investigative journalism' you have about as much intellect as Pugwash!

Par for the course nowadays. Lets drag up irrelevant, unrelated or historical issues and try and scaremonger and lets call it Panarama.

You just wish for once they would focus on issues that are real and current.

Shimrod

Loughton_Monkey wrote: »

Their 'headline' camparison was a £200 a month pension for 40 years, growing consistently at 7% per annum. Well at 7% per annum, money 40 years down the road is worth 15 times what it was 40 years previously. Why compare 99,900 pound notes with the 120,000 pound notes paid in, without any reference to the true value of each pound note at any period in time?

It's tabloid television at its worst. Throw some big numbers around, but don't put them into context. I've just had to work the numbers out on a spreadsheet it was bugging me so much. I reckon at 7%, the pension would be worth somewhere around £520K at retirement, but I don't recall them mentioning that.

Loughton_Monkey

Shimrod wrote: »

It's tabloid television at its worst. Throw some big numbers around, but don't put them into context. I've just had to work the numbers out on a spreadsheet it was bugging me so much. I reckon at 7%, the pension would be worth somewhere around £520K at retirement, but I don't recall them mentioning that.

Yes. £200 a month for 40 years? I started work exactly 39 years ago, and my gross income was £112.50 per month.

hugheskevi

There is a summary of the key points in a BBC press release.

I had a look at the same sort of 'analysis' they did with regard to contributions, charges, etc.

The pension charges highlighted in the report (offerings from HSBC, Co-op and Legal & General) would equate to annual charges of 1.34%, 1.29% and 0.82% respectively under the assumptions stated.

These were apparantly the three highest charging pensions around...looks pretty good if that is the worst they can find

Loughton_Monkey

hugheskevi wrote: »

The pension charges highlighted in the report (offerings from HSBC, Co-op and Legal & General) would equate to annual charges of 1.34%, 1.29% and 0.82% respectively under the assumptions stated.

Thanks for the summary. Yes, "80% of what you have paid in" is far more emotive than 1.34%. [If I bought an old car from my brother for £500 and it cost me £400 to buy insurance, would they scream about the Insurer charging a premium of 80%?]

As I said in the original post, the assertion of over-charging is not without merit - given what they do (and don't do) and how many people have got their little fingers in the pie - all wanting a large slice.

It will be interesting to know if the proposed 'transaction levy' for banks would apply cumulatively through the multifarious transaction chains involved in pension fund management? If so, then potentially that might add up to a tidy sum.

And what's worse, if it happens, we haven't got Gordon Brown to blame.

nrsql

I liked the comparison of the charges with the amount paid in.
They forgot to mention that the better performing the product the higher the charges so chaarges as higher percentage of money paid in could just mean that the final amount is higher.
Higher inflation would also probably give a higher percentage too - unless they were including that in the calculations i.e. using a present value. They had a constant monthly payment I think so that's probably the case.

Disappointed that L&G came as one of the highest chargers as my IFA has just taken one out for me saying that it would be amongst the cheapest - presumably as I'm going to convert in a few months it makes a difference.

Studlea_Phatt_Katt

nrsql wrote: »

Disappointed that L&G came as one of the highest chargers as my IFA has just taken one out for me saying that it would be amongst the cheapest - presumably as I'm going to convert in a few months it makes a difference.

Plan charges via IFA’s are usually adjustable, to reflect commission or fee selections, higher or lower contributions, regular payments or lump sums etc. Via banks and other direct sales operations they are usually fixed scales. Specific fund choices may carry higher or lower charges also, so it is not really possible to say L&G are cheap or expensive; it is what the charges are on your actual plan having selected all the different elements. E.G. I have a (not L&G) pension illustration from 2008, which notes the charges are 0.95% p.a. initially, dropping to 0.7% when the fund gets over a certain value.

As other posters have said, the comparison Panorama used is poor to say the least. The figure they called ‘equivalent’ is I imagine “Effect of Deductions to Date” – a very different beastie, and this measure reflects performance and should be compared to the projected fund value – not the amount paid in - chalk & cheese etc. E.G. If you paid in a one of lump sum of £10,000, and the charges were 1% p.a., using Panorama methods, you would be in debt to the pension company to the tune £10k 40 years later.



Far greater issue in my view is the excessive investment risk investors unwittingly take.


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dunstonh

Disappointed that L&G came as one of the highest chargers as my IFA has just taken one out for me saying that it would be amongst the cheapest - presumably as I'm going to convert in a few months it makes a difference.

L&G is one of the cheapest stakeholders you can get. Their personal pensions are typically more expensive than the other providers for long term business but no different to the stakeholder for short term (apart from where external funds are used).

The figure they called ‘equivalent’ is I imagine “Effect of Deductions to Date” – a very different beastie

There was some talk a few years back about the FSA removing that column from illustrations as it was misleading and confusing as research showed that people thought it was the actual charges. Not the charges plus 7% p.a. compounded.