What We Don't Know...

towag

Here's the secret life of the money in your pension pot - it will make you angry....
http://www.independent.co.uk/voices/heres-the-secret-life-of-the-money-in-your-pension-pot-it-will-make-you-angry-a7008676.html

dunstonh

it will make you angry....

You are right. The quality of the journalism on that article is disgraceful. Loads of errors and 2+2 =5.

bigfreddiel

towag wrote: »

Here's the secret life of the money in your pension pot - it will make you angry....
http://www.independent.co.uk/voices/heres-the-secret-life-of-the-money-in-your-pension-pot-it-will-make-you-angry-a7008676.html

This is such old news it's not news.

Everyone knows about outrageous charges and hidden fees, but they choose to ignore it and would rather spend hours on deciding on what options to have with their next take-away meal, or which phone contract is best for their new iPhone, or where will their team end up in the league at the end of the season. What ones pension fund is doing and how much it costs is just not interesting to anyone below tha age of 50 or is it 40!

Thanks for the link tho' quite amusing.

fj

nearlyrich

I am not sure why anyone would begrudge paying an expert to maximize the return on their wealth?? Surely it's like begrudging your hairdresser's salary or your builder. Yes you can do it yourself but I prefer to spend my time doing what I am good at which is making the money to invest. I am interested in how my money has grown over the years and I have taken an interest from the start when I was in my 20's.

atush

well i dont change my tyres and oil, nor cut my own hair.

I do invest for myself, but will use an IFA when I need to.

dunstonh

For reference, the article doesnt seem to know if its talking about defined benefit schemes or money purchase or workplace or individual. It jumps all over the place. It can't tell the difference between trustees, administrators, providers, fund houses and IFAs and specifically mentions investment bankers (no doubt playing on the bash-a-banker popular routine). It uses 1.5% as a typical charge despite workplace schemes being capped at 0.75% on internal or default funds. Individual schemes have had rule RU64 since 2001 which requires justification when exceeding 1.0%.

It also makes reference to an FCA warning last month that apparently told providers that they were spending too much on taking IFAs to expensive golf trips. There was no such warning. The FCA have a monthly publication called "Regulation round up". The April 2016 version had a "hot topic" as a follow up to an earlier review. It reminds firms of some of the requirements. There is no mention of IFAs in it or golf trips or any form of warning. read it here https://www.fca.org.uk/your-fca/documents/regulation-round-up/rru-april-2016

We had a compliance audit a couple of weeks ago and were told that it was probably a good idea to include on our gifts and inducements register if lunch was provided or there was a bacon roll etc. Often you drive a couple of hours to one of these training sessions run by providers/fund houses etc and they will provide a buffet lunch or a bacon roll with a cup of tea. Your typical hotel conference style food. That apparently was a common omission by firms who thought gifts actually meant gifts and not bacon rolls or a cup of tea.

kidmugsy

I agree; I think a cuppa and a bacon roll ought to qualify for a de minimis exemption. Otherwise policing it will cost more than the snack.

dunstonh

kidmugsy wrote: »

I agree; I think a cuppa and a bacon roll ought to qualify for a de minimis exemption. Otherwise policing it will cost more than the snack.

Most firms have a threshold where it is something above a monetary amount. Typically around £5-£25. This is to avoid the branded diary or pens supplied at meetings from being recorded.

The guidance we got was specifically linked to that FCA monthly publication that said:
Firms must record sufficient detail of hospitality provided and received to ensure effective monitoring.

We were told just to record who went to a meeting and a simple one liner in the notes as a best practise. i.e. write "no gifts. Buffet lunch and coffee supplied with bowl of foxes glacier fruits on table". Otherwise you just end up with a blank register, which most firms have, as no-one is gifting any more. The regulator doesn't like blanks even if there is nothing to report. It wants you to say there is nothing to report. Or maybe its the compliance support companies that want you to say it but they base their knowledge on visits from the FCA.

kidmugsy

Buffet lunch of champers and caviar, I hope.

SallyG

"all these charges are simply stealthily subtracted from the value of our pension pots......."
How?

sandsy

Usually through the unit price.

These will generally be things like transaction costs which includes dealing costs, dealing taxes, investment research.

For more information, Google the true and fair campaign and Gina Miller.

Estimates of the extent of the hidden charges vary but are generally thought to add between 0.5% and 0.9%pa to the annual costs of being invested.

These charges are currently undisclosed and are not included in mandated illustrations; nor are they included in the workplace pension cap so the true costs of being in a workplace pension can be higher than 0.75%.