personal finance

Readers support FT campaign for clear pension charges


Hundreds of readers and industry voices have shown their support for FT Money’s Campaign for Clear Pension Charges after last week’s exposé of “shameful” industry practices that are making it almost impossible for customers to identify and compare the real costs of their investments.

The FT commissioned Holly Mackay, an investment expert and founder of the Boring Money website, to compare the cost of pensions drawdown charges across 10 platforms and advice business.

Her analysis of charges on a £1m pension pot found the difference between the cheapest provider and the most expensive could be nearly half a million pounds over a 25-year investment horizon.

But investors shopping around for the best drawdown policy face a gruelling task because of opaque and complex fee structures, and the refusal of some advisory firms to publish charges online. 

The UK Shareholders’ Association, a lobby group with thousands of private investor members, was one of the first to show support for the campaign. “Thank you for an excellent article calling for greater transparency of pension charges,” said John Hunter, UKSA director. 

“The table of fees showing the cost of charges over 25 years is already a killer, but investors would also suffer nearly as much again in loss of income on that money over time. If it’s in the pocket of a financial adviser it’s earning him a return, not them. That’s how compound interest works.”

Ruston Smith, non-executive chair of the Tesco pension fund, one the UK’s largest retirement plans, said he “fully supports” the campaign. “Savers need to know what they are buying, and what they are paying — it’s a basic obligation to customers,” he said.

FT reader Chris Brown emailed to say: “Well done FT Money for highlighting the lack of clarity in pension charging. I have two Sipps with a platform, one in drawdown and one not yet in drawdown.

“Like Holly Mackay, I have tried to compare charges between platforms and although numerate, I gave up. All power to FT Money’s campaign and let’s get the pension providers and the FCA moving.”

It took Ms Mackay more than a week to get to the bottom of fees levied by 10 providers, leading her to conclude it was “near impossible” for an ordinary investor to work out how their retirement fund would be impacted by charges.

It took Holly Mackay more than a week to get to the bottom of fees levied by 10 providers © Phil Adams

“It is crazy in 2020 that charges are still so opaque,” said Ms Mackay on this week’s edition of the FT Money Show podcast. “If you’re a DIY investor, all of the information is available on websites — it takes a bit of digging, but you can do it. If on the other hand you want to see an adviser at some of the biggest advice brands in the UK, it is impossible to do a broad-brush online comparison of what you might expect to pay.”

Ms Mackay’s column in FT Money last week revealed how she was recently contacted by someone paying nearly £28,000 a year in fees on his £1m pension pot and £100,000 Isa. He asked her: “Am I being rinsed?”

FT readers on Twitter responded with a resounding “yes”. 

“For £28,000 a year I’d want to know what my full-time adviser employee was doing all day,” said Brian Brown. 

Nic Round, who Tweets as @thewealthcoach, replied: “How many years has this been going on? Just imagine what the value of investments would be if this investor paid more attention years ago. The lesson is for all investors to wake up to what’s happening. Be curious. Be interested.”

Support our campaign

The aims of the FT Clear Pension Charges campaign:

1 Every advice firm and platform should publish details of all fees online, and make these easy to find with a prominent homepage link 

2 All firms should have a calculator on their website which provides an indicative amount of charges for any prospective customer to personalise costs

3 Companies should make it easier for consumers to compare charges and shop around. 

If you would like to add your voice to our ongoing campaign, get in touch:

Email us: money@ft.com

Tweet us: @FTMoney or use the hashtag #ClearPensionCharges

Write to us: FT Money, Bracken House, 1 Friday Street, London EC4M 9BT 

Another reader said he went through “similar pain” to Ms Mackay when reviewing the charges on his £250,000 drawdown Sipp and trying to do like-for-like comparison with other providers. However, he said the pain was worthwhile.

“I was scared of switching and then finding out I hadn’t factored in all the charges of the new provider. I switched from a provider charging a percentage fee to one that charges flat fees, and I now pay over £600 per year less in charges.”

“Let me express my full support for your campaign,” emailed another reader, who wished to remain anonymous. “I must confess I have never sought to analyse comparative charges — the task fills me with dread (and I am a chartered accountant!).

The analysis also prompted one reader to confess that he wasn’t really sure what he was paying. “After reading your very decent argument about pension charges I have decided to ask my adviser what they charge,” said the reader.

Ian McPherson, another reader, said pension charges were a “potential minefield” for investors. “Other than regulation, the most hopeful ‘solution’ would be transparency and publicity that would create a proper functioning market and oblige the participants to offer value for money, or quit,” he said. 

The campaign is already supported by leading industry figures, including Baroness Altmann, a former pensions minister and Mick McAteer, a former board member of the Financial Conduct Authority. 





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