Concerns Continue to Mount over Personal Pensions
Both the Financial Services Authority (FSA) and the Pensions Minister have been contacted by Watchdog asking for problems within their market to be addressed.
The organisations have pleaded with the Government to review the policy of ‘no transfers’ to within NEST, the new low cost savings scheme.
Individual Private Pensions (IPP) are a source of money for retired persons who may not have had easy access to pensions arranged by employers. Personal pensions are intended to offer people a tax efficient and portable means of saving for their later years, but an investigation carried out by Consumer Focus (the Consumer Champion organisation) identified three key areas of the market which disadvantage customers the most.
The first of these was that some consumers are being ill-advised, receiving recommendations to switch to different pension products which entail higher charges or levels of risk. Case studies from this area suggested that this change could be detrimental to consumers and leave them worse off when the time came to retire.
The second is that a number of pension products charge on-going fees known as “transmission fees”. These offer little benefit to consumers and ultimately only reduce the amount of money invested for their pensions.
Lastly, the investigation demonstrated that it is still increasingly difficult for consumers to find the best pension deal available. Speaking on the subject, Christine Farnish, Chair of Consumer Focus, said that “the complexity of costs and charges, despite years of work by regulators on disclosure, make it all too easy for savings that should be going into a pension pot to be siphoned off in costs and charge”.
This lack of disclosure makes it difficult for customers to ascertain which pension product suits them best, potentially leading to insufficient savings for their retirement.
By managing your monthly expenditure, a prepaid credit card could help you to effectively budget your finances in order to have more money left to save for the future.