High Charges on Pensions
The Independent Project Board released their report about old-style pensions yesterday. Their findings suggested that there is around £26billion held in pension funds with high charges (high by today’s standards) in pensions prior to 2001.
Many will know that I have long advocated regularly reviewing pension providers to ensure that you are getting more competitive terms. The pension industry has moved forward enormously over the last 20 years or so. I still occassionally come across an old-style pension which has half a dozen fund choices and huge exit penalties, some thankfully have lower exit penalties, but this can still feel punitive and rather hard to accept.
In practice when I started Solomons in 1999, every pension that we set up didn’t have any penalties, the reason being rather simple – we removed contractual commission. At the time this was unusual and it wasn’t until 2013 and RDR that all advisers had to follow suit. Today a pension is little more than an investment portfolio with a pension tax wrapper around it, with access to thousands of investment choices and available to view online.
Perhaps you still have an old style pension or know someone that does. We have saved clients thousands of pounds in charges and improved returns by having an up to date arrangement. I liken the degree of change within pensions as the typewriter to the ipad or tablet, with its vast array of options and ease of correcting mistakes..