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Savers Get Nothing In Return For Rip-Off Fees In Pension Fraud

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Savers are losing up to a third of their investments in rip-off charges to fund managers who "do virtually nothing" in a practice the City regulator is preparing to investigate. Millions of people pay extra fees for Isas and pensions because they are told that a professional investor will generate high returns for them. But savers are being misled by one in three cases, experts said, because the fund managers are in fact simply mirroring the return on the FTSE stockmarket. Many were "doing no more than a dumb machine" to help enlarge savers' Isas and retirement funds.

http://www.telegraph.co.uk/finance/personalfinance/investing/11424051/Savers-get-nothing-in-return-for-rip-off-fees-in-pension-fraud.html

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The dumb machine by definition beats 50% of the market. The key thing is not to pay someone to execute the dumb strategy. Executed with minimal fees, being dumb beats the vast majority of the market.

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It has been known for years that fund managers are no better than a monkey with a dart board picking shares at random in the long term.

The strange things is people still use them and still pay lots of money for research papers written by 25 year olds working 100 hour weeks despite the fact it adds no value.

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I agree with the comments above but personally, I only pay into my pension to get my 3% ERs contribution ... 3% of my gross goes in matched by my private sector employers contribution. If I did not contribute then I would automatically be giving myself a 3% paycut as well as missing out on a "death in service" benefit if I were to unexpectedly depart this planet. I wonder how many are in a similar position which keeps the lifeblood of this industry going?!

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I agree with the comments above but personally, I only pay into my pension to get my 3% ERs contribution ... 3% of my gross goes in matched by my private sector employers contribution. If I did not contribute then I would automatically be giving myself a 3% paycut as well as missing out on a "death in service" benefit if I were to unexpectedly depart this planet. I wonder how many are in a similar position which keeps the lifeblood of this industry going?!

My partner pays in 5%, her employer 10%. So double the reason for it to be a no brainer for her too.

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I agree with the comments above but personally, I only pay into my pension to get my 3% ERs contribution ... 3% of my gross goes in matched by my private sector employers contribution. If I did not contribute then I would automatically be giving myself a 3% paycut as well as missing out on a "death in service" benefit if I were to unexpectedly depart this planet. I wonder how many are in a similar position which keeps the lifeblood of this industry going?!

Same here but there are other reasons (other than employer contribs) that I pay into the pension as well:

1. I can manage the pension myself via a SIPP. I use low cost index trackers and a 60/40 global equity/investment grade bond split.

2. I'm currently a higher rate tax payer but will probably be a basic rate payer in retirement. So I get tax relief at the higher rate and I don't even have to claim it back from HMRC because it is done by salary sacrifice.

I do have some money in ISAs as well (non-retirement savings), but because of point 2. it makes more sense to put retirement savings into the SIPP.

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All a big rip off. We would be better off if they got rid of ISA's and tax relief on pensions and the extra tax take the government got was put into a higher state pension.

When I say all I am not including the city worker with his yacht.

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My partner pays in 5%, her employer 10%. So double the reason for it to be a no brainer for her too.

I'll bet she pays by earning 10% less salary. There is no free lunch.

Demand all your money upfront if you can, I know better than the govt and their paymasters how to spend my money.

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