The rumour that the Treasury was to announce a decision on whether to allow an increase in charges for Stakeholder pensions has proved to be true. Previously, the maximum charge was 1% pa only. Meaning a very clean, penalty free and transparent pension plan.
There are many in the industry who had been lobbying to have this increased to between 1.5% pa and 2.0% pa. An announcement today confirms that the stakeholder price cap for pensions is to be raised to 1.5 per cent for the first 10 years of the life of a product and reverting to 1 per cent thereafter.
Our view
This will mean that as the charges are marginally higher, more commissions can be paid to advisers which may encourage a greater move to advise on them. Currently, many financial advisers feel that they cannot offer advice on Stakeholder because they cannot cover their costs for the time or advice. We believe that the charges cap should not have been increased. Like the Consumers Association, we believe that increasing the charges will benefit no one except the adviser.
THE ONLY PEOPLE BETTER OF AS A RESULT OF THIS ARE PENSIONS COMPANIES AND FINANCIAL ADVISERS. IT STINKS!