Pension hidden charges

bigdec

I've just been listening to the money box BBC radio show about the hidden charges with people's pensions and it's raising very interesting questions about the overall cost that individuals may be paying on their pension pot .https://www.bbc.co.uk/sounds/play/m0001jpx

:eek:

dunstonh

What hidden charges?

Certainly, on legacy pensions from decades ago, there could be charges that are not easily disclosed. That was not a requirement back then. However, on most pensions, there are no hidden charges at all.

kidmugsy

dunstonh wrote: »

What hidden charges?
on most pensions, there are no hidden charges at all.

There you go again, you old spoilsport. Can't you let ill informed people indulge themselves in being outraged by inaccurate journalism? Must the voice of rationality always make itself heard?

tacpot12

The programme was making an interesting point about charges. The programme agreed with dunstonh, that most pensions (they suggested those started after 2001) would not have fees that were hidden from the customer, but older pensions might. But the main thrust of the programme is that most, if not all of the investment companies have such a poor understanding of the costs that they are actually charging to customers that when they quote a TER or OCF is quite likely that they have left out some charges and the customer ends up paying more that the quoted TER/OCF.

One of the guests on the programme, Professor Chris Sier, oversaw an FCA investigation into the issue and has helped produce a checklist that Investment Firms can use to ensure that they have considered all the costs that they should be including so that retail consumers can have confidence in the TER/OCF figures they see.

kidmugsy

tacpot12 wrote: »

most, if not all of the investment companies have such a poor understanding of the costs that they are actually charging to customers ...

It is a truth universally acknowledged that TER/OCF does not include all charges. The notion that this is essentially accidental is not one that would have occurred to me.

dunstonh

Also surprising they focused on TER/OCF.

TER shouldnt be in use for OEICs/UTs for about 3 or 4 years now. You see it on some other assets though. TER has never been used with pension funds. OCF is not used with pension funds either.

It is a truth universally acknowledged that TER/OCF does not include all charges. The notion that this is essentially accidental is not one that would have occurred to me.

This is why MiFID II looked to include transaction costs. However, when you include profit and loss into the equation, it makes a bit of mockery of the disclosure. Plus, pension funds are exempt from MiFID II (as are UT/OEICs held within a pension)