Comment on the report by the RSA about increasing transparency in UK pensions
Commenting on today’s report by the RSA about increasing transparency in UK pensions, Gina Miller co-founder of SCM Private which has spearheaded the True and Fair Campaign said:
It has been heartening over the last days and weeks, to see so many people from the financial services industry back our call for greater transparency in fees and charges. The True and Fair Campaign which we have been working on for over a year and officially launched in February this year, has been pressing the industry to sign up to our code and provide customers with 100 per cent transparency about their investments. But paying lip-service to transparency is one thing, doing something about it is an altogether different challenge. Change is coming, and we welcome the support of everyone who’s starting to recognise this.
“Over the years the financial services industry has become adept at transferring wealth from customers’ pockets to their own. For too long people buying investment products and saving via pensions have been comprehensively misled by an industry that puts its own interests before those of its customers.
“Pensions are a long term investment – 25 years or more. So a small difference in fees and charges can make an enormous difference to the amount of money customers get out at the end. Of those fees which are disclosed, like the annual management fee, a difference of 1 or 2 per cent doesn’t seem like much. But over 25 years a pension that charges the extra 1 per cent AMC will cost the pensioner 28 per cent of their original investment in these extra charges. However, it’s not just the visible, up-front fees that reduce the value of someone’s savings. It is the hidden fees: administration costs and dealing fees that can take an equally significant bite. But a lack of transparency means that more often than not people are not even made aware that they will be paying them.
At a time when providing for our own futures has never been more important, our trust in the financial services industry has never been lower. Later this year the Government’s auto-enrolment scheme will bring millions more people into the pension’s arena. Unless the industry wakes up and begins to take steps to restore our trust, millions of people are likely to opt out. And who can blame them? If the industry isn’t prepared to give customers 100 per cent of the information they need to make an informed choice then it will only have itself to blame if customers choose to make no choice at all.”
Posted By: True and Fair, 2:59 pm