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MSE News: Ed Miliband attacks high pension charges

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MSE News: Ed Miliband attacks high pension charges

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"Labour is planning to turn its fire on pension companies which rip off their customers with excessive fees and charges..."
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  • BLB53BLB53 Forumite
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    I really cannot take these politicians seriously - they did nothing about this when they were in office, but are quick to point the finger if they think they can score a few points in opposition.
    We have a climate emergency and need to re-think investing strategies to avoid sectors that are part of the problem such as oil & gas and embrace climate-friendly options such as renewable energy.
  • oldvicaroldvicar Forumite
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    Sounds like a vote winner.

    As long as the industry or the present government don't get there first before the election.
  • dunstonhdunstonh Forumite
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    It appears that Labour are not aware of the RDR which actually forces these fees to exist as a requirement. The RDR that was put in place under a Labour government.

    You also get that nagging feeling that they dont know the difference between initial and annual charges and are trying to present initial charges as annual given the way the switch between the two things in their release.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Paul_HerringPaul_Herring Forumite
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    Oh look, Mr Milliband has found another bandwagon to jump onto, (Big Five Banks should sell branches being the last one not even a week ago.)one that he missed when he was in a position to do something about the issue.

    I think parliament should bring out a white paper banning bandwagons.
  • edited 13 July 2012 at 1:35PM
    jamesdjamesd Forumite
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    edited 13 July 2012 at 1:35PM
    From the Press Association story on which this piece seems to be based:

    "Evidence suggests that the vast majority of schemes do currently have appropriately low fees, with a mean average of 1.23% and lower charges in the larger schemes, said the DWP. A survey carried out for the department in 2009 found that occupational default funds had an average annual management charge of between 0.4% and 0.6% of funds under management, with none higher than 0.9%. Nest's figure will be 0.3%, with a contribution charge of 1.8%"

    Amazing how much different the numbers are when the political posturing and 5% nonsense is stripped out.

    If he wants to do something useful he could ban charges for transferring pensions between providers and make it mandatory for all defined contribution schemes, including NEST, to allow transfers out so that people can switch to the best value for them more easily. NEST is an expensive high risk scheme because it bans transfers out and has charges that are higher than the best schemes in the free market.

    The Retail Distribution Review looks likely to impose a minimum of 0.6% annual charge on many schemes, about 0.3% for the investment platform and another 0.3% or so for even low cost, management-free investments.
  • edited 13 July 2012 at 6:00PM
    dunstonhdunstonh Forumite
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    edited 13 July 2012 at 6:00PM
    More information is coming out on his sources. Neptune have issued a statement as he specifically mentioned one of their funds as having a 3.96% charge. It now turns out that he doesnt know the difference between pension funds and retail investment funds.

    A statement from the fund manager says the fund is a retail investment fund and not a pension fund, as reportedly described by Miliband.

    It also points out the fund’s performance is ranked first out of 290 IMA funds, with a return of 19.66 per cent, compared to an IMA sector average of 4.07 per cent.

    Neptune argues the cited ‘charge’ of 3.96 per cent was in fact the total cost to investors in the fund, which has subsequently been reduced. This calculation is based on the fund’s total expense ratio plus portfolio turnover rate. The latter reflects the market costs of buying and selling shares for the portfolio, as opposed to being a source of revenue to the fund manager, and is typically higher for smaller funds.

    A statement from Neptune says: “This fund is currently £10m in size. Furthermore, in the current environment the level of management involved in dealing with volatile equity markets can lead to a variable and occasionally higher level of turnover. All of this activity is with the aim of protecting and growing our clients’ investments.

    “As the Which? figure was published in November 2011, it uses an old capped TER of 2.5 per cent. Neptune now subsidises the fund further by capping the TER at 2 per cent in order to protect its investors. Neptune’s annual management charge for the retail share class, which is a component of the TER, is 1.6 per cent. This charge reflects the active management approach and level of research input used on the Fund.

    “Thirdly, whilst the fund invests predominantly in mid-cap UK companies, which is beneficial to the UK economy, the return to the Fund’s investors has been a total return of 17.38 per cent over the last twelve months compared to negative returns from both the Fund’s IMA peer group and its benchmark index, the FTSE 250. In addition to the one-year figure, the Fund has returned 88.16 per cent over three years and 123.15 per cent since its inception, making it one of the best performing funds in its sector over the long term.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • ffacoffipawbffacoffipawb Forumite
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    dunstonh wrote: »
    It appears that Labour are not aware of the RDR which actually forces these fees to exist as a requirement. The RDR that was put in place under a Labour government.

    Typical.Incompetent in Government and incompetent in Opposition. Long may they remain the latter.

    Why trust a party whose leader shat on his own brother?
    Retired Cymro

    🏴󠁧󠁢󠁷󠁬󠁳󠁿 Cymru am Byth 🏴󠁧󠁢󠁷󠁬󠁳󠁿
  • gadgetmindgadgetmind Forumite
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    dunstonh wrote: »
    It now turns out that he doesnt know the difference between pension funds and retail investment funds.

    Those who'll get a gilt-edged pension without having to so much as lift a finger, or bother their little heads with such trivia as market risk, are unlikely to know the difference between a pension fund and a hole in the ground.

    Of course, some might argue that there isn't much difference. :D
    I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.

    Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.
  • MobyMoby Forumite
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    MSE_Helen wrote: »
    "Labour is planning to turn its fire on pension companies which rip off their customers with excessive fees and charges..."


    OfficialStamp.gif
    Finally good to see a politician making this point. Ed has shown himself ahead of the curve over Levesen, the corruption in the City and now reducing pension charges.
    Brexit: Voting to take back what we had never lost in order to lose everything we had.
    Madness!
  • prowlaprowla Forumite
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    NuLab did the biggest raid on pensions since Robert Maxwell - they can hardly reinvent themselves as the party that gives a damn about pensions.
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