Round Number Pension Charges

Round Number Pension Charges.

Sadly, many of us have become used to the small print of our pensions, insurance and investment policies.

Within the small print there are usually complex structures outlining the charges applied to our investments such as a bid offer spread %, initial charge %, annual management charge %, fund management charge % and even financial adviser ongoing charge %. This can make life extremely difficult for you and your financial adviser to compare like for like policies to decide which is the best for most suitable for you. In many cases consumers do not understand exactly how much they are paying in charges.

At financialadvice.net, we have laboured this point ever since the day we started trading in the year 2000 and have always quoted clients set fees in round £ numbers and pence.

Pension companies clear charges

Finally, it looks like the government have recognised the need for all financial companies including pensions and investment companies to do the same.

The Conservative party has suggested that pensions expert Roz Altman will be appointed by them as a minister for consumer protection if the Conservatives are re-elected, even in a coalition government, to oversee pension protection for the consumer. In her opening statements Ms Altman has suggested that she may look at forcing pension companies to publish their annual charges levied on a pension in round £ numbers and pence.

We welcome the move. When you buy a loaf of bread the price is not quoted in % of your total shopping bill. Why should financial advisers, investment companies and pension companies be allowed to do this, even when banks charge round £ and pence numbers for bank charges.

Even workplace pension not clear

Even with the new workplace pensions, the annual management charge for NEST is set at 0.75% per annum and whilst this looks small when you have built up a pension fund of let's say £100,000 this would mean an annual charge of £750 per annum. The looks a lot smaller when you read 0.75%.

You might pay more

If pension companies are forced to charge in round pounds rather than percentages this mainly that people with smaller pension funds in fact pay more. We suspect though by forcing pension companies to quote set fixed and tiered real number fees, it will have an effect of forcing charges down. The ‘gravy train’ days or over boys!