Pension Changes Planned - Better Or Worse?

[SarahBell]

Pension income could be expanded by 40% if collective pension schemes were allowed by law, the Royal Society for the encouragement of Arts (RSA) said.

Collective pensions are cheaper to administer and, with more members, can take bigger risks with investments.

http://www.bbc.co.uk/news/business-11926127

The pension still needs to be managed well else it's a waste of time and money.

[leicestersq]

Pension income could be expanded by 40% if collective pension schemes were allowed by law, the Royal Society for the encouragement of Arts (RSA) said.

Collective pensions are cheaper to administer and, with more members, can take bigger risks with investments.

http://www.bbc.co.uk/news/business-11926127

The pension still needs to be managed well else it's a waste of time and money.

Collective pensions are a lot easier to mismanage, and rob.

And if the law about retired people getting first dibs on failed funds, then they are definitely bad ideas.

Big managed funds are normally suggested by those who have a vested interest in managing big funds.

[Si1]

Big managed funds are normally suggested by those who have a vested interest in managing big funds.

however, I understand they do well in Holland

but Holland is a smaller country than us, a big managed fund over there counts as smaller than one over here

when managed funds get larger than £5-10billion, such as many high performing UK funds (a few emerging markets and special sits funds in the UK I can think of) they find it hard to perform anymore because the universe of available investments is simply much smaller. I suspect the Dutch case is therefore not as privy to those problems because it is a small country investing in a bigger universe than itself.

Much better imho to adopt the American solution which is to compel or force financial advisers to charge upfront fees and not long term annual % charges on funds instead, much more transparent that way

Edited December 6, 2010 by Si1

[leicestersq]

however, I understand they do well in Holland

but Holland is a smaller country than us, a big managed fund over there counts as smaller than one over here

when managed funds get larger than £5-10billion, such as many high performing UK funds (a few emerging markets and special sits funds in the UK I can think of) they find it hard to perform anymore because the universe of available investments is simply much smaller. I suspect the Dutch case is therefore not as privy to those problems because it is a small country investing in a bigger universe than itself.

Much better imho to adopt the American solution which is to compel or force financial advisers to charge upfront fees and not long term annual % charges on funds instead, much more transparent that way

Better still, set up individual schemes that allow people to buy the assets themselves, like a SIPP. You could even allocate these randomly like a lucky dip. As long as they have a fair spread of assets in their portfolio, they shouldnt get divergent peformance.

And they also get their vote back on their shares, with which they can vote out overpaid board members.

[Si1]

Better still, set up individual schemes that allow people to buy the assets themselves, like a SIPP. You could even allocate these randomly like a lucky dip. As long as they have a fair spread of assets in their portfolio, they shouldnt get divergent peformance.

And they also get their vote back on their shares, with which they can vote out overpaid board members.

most company pension schemes have a pretty good choice of funds available and are effectively min-SIPPS, however aren't always well documented, and even permit share ownership for a fee in some of them, at SIPP-equivalent costs.

In fact, for good managed funds and switching costs, they are much cheaper than, say, Hargreaves-Lansdown's rip-off annual 1.5% fees for managed funds

[PopGun]

Games up for pensions.

Before it was just those on the basic rate of income tax who were better off not bothering. After the next treasury heist and dissolution of pension tax relief, the gains against risk for the majority moves closer to zero.

[ElPapasito]

however, I understand they do well in Holland

but Holland is a smaller country than us, a big managed fund over there counts as smaller than one over here

when managed funds get larger than £5-10billion, such as many high performing UK funds (a few emerging markets and special sits funds in the UK I can think of) they find it hard to perform anymore because the universe of available investments is simply much smaller. I suspect the Dutch case is therefore not as privy to those problems because it is a small country investing in a bigger universe than itself.

Much better imho to adopt the American solution which is to compel or force financial advisers to charge upfront fees and not long term annual % charges on funds instead, much more transparent that way

Yeah but whatever the sizes and structures I want to know why, like for like, Dutch pensions get a 50% better return than ours. I suspect more British subservience and over-estimation of the quality of our financial services industry is at the heart of it, both by government, regulators and pension holders too for that matter.

[co2_is-not_man_made]

I dont know if people are aware but something called NEST is coming in a few years time when fully rolled out it will force people to pay 3% of their salary towards a new state pension and make employers macth this amount, apparently it will be very difficult for employees to opt out unless thay are in a company scheme and employers will be fined if they dont deduct the pension contruibution.

[corevalue]

I dont know if people are aware but something called NEST is coming in a few years time when fully rolled out it will force people to pay 3% of their salary towards a new state pension and make employers macth this amount, apparently it will be very difficult for employees to opt out unless thay are in a company scheme and employers will be fined if they dont deduct the pension contruibution.

Indeed. Yet another conduit to funnel money from the common people to the city slickers. Am I right in saying that it will be illegal to advise people to opt-out, or is that just employers who might give that advice?

[billybong]

This was the result of lower charges and better returns from a large scheme covering hundreds of thousands of people. There would be lower administration costs because the pension company would not have to report on an individual's fund.

They keep coming up with the "low fees" idea on a regular basis.

"Low fees" are of course anathema to crooks running UK pension funds living the caviar lifestyle at savers expense. Size of fund doesn't seem to be the issue Equitable Life had hundreds of thousands of savers and look what happened to those pensions. Ripped off pensioners still not compensated after 10 years or so of legal procedure.

I can't see how they won't have to have a level of report on an individuals fund to keep track on how much anyone is entitled to when they retire etc. They already don't report to individual savers on how their account is performing unless specifically asked.

Now it has called for a change to regulations in the UK that would allow these collective schemes to be set up.

Regulated by the laughing stock FSA (or some new version of it) who allowed the crooks to get away with the loot year after year for years on end and even decades while pretending to look after savers.

It's not convincing at all but if they can match overseas pension funds that get 50% better returns than the UK funds then of course that would be good.

But it's Britain the land of broken pledges so can savers afford to take the risk and think it will come to anything positive and give them the pension promised.

Edited December 6, 2010 by billybong