Fees for pensions- please help!

Pal

I agree that there are still some areas of the investment industry that need sorting out (commission based sales, high up front charges and so on) it is a lot better now than it used to be.

The factors you mentioned are not really the industries fault:

- Stock market falls cannot be blamed on the pension or investment industries. Believe me, if they had the choice it wouldn't have happened as it has severely damaged their profitability!

- Taxation changes was entirely the Government's choice.

I sympathise with you regarding your uncle. Life can be harsh.

The problem is that there is distortion of views, in that people whose relatives die early want to get their hands on the remains of the pension fund, because they feel that the individual didn't get value for what they had saved. However, if someone lives to 100 and costs the annuity provider or pension scheme a fortune, they assume that is their right rather than feeling grateful that they have benefited hugely from the pension company. In the end, the pension provider cannot win.

Pensions are basically a form of mutual insurance, just like car insurance. With car insurance you pay irrespective of whether you ever make a claim. Those who never claim are subsidising those that do claim.

With a pension, some people also never get to make a claim, but their money is used to subsidise those who do, by living longer than average.

I understand that it might be viewed as harsh, but an alternative system where everyone uses their own money to fund their retirement (without some kind of annuity arrangement) would have two results:

- Those who die early do not benefit from their savings (because they have died) but it is instead paid to their relatives;

- Those who live longer eventually run out of money and die in poverty.

Not a great alternative is it?

DiggingOut

I understand that it might be viewed as harsh, but an alternative system where everyone uses their own money to fund their retirement (without some kind of annuity arrangement) would have two results:

- Those who die early do not benefit from their savings (because they have died) but it is instead paid to their relatives;

- Those who live longer eventually run out of money and die in poverty.

Not a great alternative is it?

In some cases, people would prefer this, and it would probably be better if people had some choice.

Pal

Yes, but the whole system wouldn't work if everyone has the choice to opt out of it. For every person who opts out because they don't expect to live for very long, the cost of buying annuities for everyone else would increase.

You would end up with large numbers of pensioners running out of money and falling back on the taxpayer to bail them out, exactly why the Government offers tax advantages for people to save using pensions.

In practice, if people do not want to buy an annuity then they shouldn't save using a pension. They would lose out on the tax advantages and, if they live too long, would probably be miserable for the rest of their lives, but that is their choice to make.

FredaT

Slightly off topic but I'm hoping you might be able to tell me about extra charges for PPI on contributions? Just found out I have been paying this out of my pension contributions for the last 10 years when I thought all money was going to fund (except management fee which I knew about). I had a break for maternity leave and just had paperwork to re-start D/D when I spotted this. Spoke to them to confirm as I couldn't believe it and she said not compulsary.
Can I re-claim like on loans and CCards etc?
Hope yopu can help.

dunstonh

Can I re-claim like on loans and CCards etc?

No. Unlike general insurance policies, this is shown on your illustration and you are asked the medical questions and you sign the application. It is also declared on your suitability report (or reason why letter as it would have been called back then).

Retired_I.F.A.

FredaT wrote: »

Slightly off topic but I'm hoping you might be able to tell me about extra charges for PPI on contributions? Just found out I have been paying this out of my pension contributions for the last 10 years when I thought all money was going to fund (except management fee which I knew about). I had a break for maternity leave and just had paperwork to re-start D/D when I spotted this. Spoke to them to confirm as I couldn't believe it and she said not compulsary.
Can I re-claim like on loans and CCards etc?
Hope yopu can help.

Sounds like you have premium waiver. is 3% of the gross investment premium it's premium?

Dunno if it's even allowed to be added to a pension premium nowadays but it's the dog watsits dont complain you have it be grateful.

The usual rule with waiver is, if you off work for 6 months or more through sickness or accident it'll pay your contribution till you return to work or the retirement date of your plan.

The sale of a personal pension without waiver could be considered a missale.

FredaT

Retired_I.F.A. wrote: »

...Dunno if it's even allowed to be added to a pension premium nowadays but it's the dog watsits dont complain you have it be grateful.

..

As I'm about to re-start contributions should I add this too if they let me?