Thursday, December 22, 2011

Pension holders totally ripped off by city

Advisors tell treasury to bare all on pension rip off

seems crystal clear to me that the city have been fleecing the general public for decades making things complex and difficult to understand then charging higher fees than fund growth. funds are often worth less than money paid in.......wait 'til the middle classes go out on the street!

Posted by taffee @ 03:50 PM (3383 views)
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23 thoughts on “Pension holders totally ripped off by city

  • mark wadsworth says:

    “seems crystal clear to me that the city have been fleecing the general public for decades making things complex and difficult to understand then charging higher fees than fund growth. funds are often worth less than money paid in…”

    Oh yes, completely and utterly. Broadly speaking, the entire value of the tax breaks is soaked up by the fees, commissions and charges levied by pension fund managers and all the hangers on, solicitors, auditors, actuaries etc etc.

    As one of the hangers on, I say this without malice or spite, those are just the facts and figures.

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  • We have this idea of the fool who hides his money under his mattress.

    That these people are better off than using ‘trusts’ beggars belief.

    Regarding the investment system, if someone said to the angry middle classes, “Let’s get them!”
    Who would the crowd run at?

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  • I must admit, i am one of those people that glance at my annual pension report, shrug my shoulders, and file it away thinking, i must really look at that in detail and compare it to my previous annual reports to see where it’s going. But never do. I guess i had the belief that the industry was looking after my investments for my interest, not their own though.

    Why can’t they simplify the report to show the basics. Ie funds invested, current fund value, %growth to date, all charges, charge as a % of fund. And list all the years info. There’s more than enough paper in those things for at lease 50 lines of info.

    Another thing i noticed. On my most recent pension report, they are now indicating a 3% growth option as well as the 5%, 7%, and 9%. I wonder how many actually mature at 9, or 7. And 3% growth would be absorbed totally by the charges. WTF is all this about. Who is protecting me?

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  • This particular article (having read it 3 times now) is IMO largely utter garbage. Lets get a bit of balance on this one using factual information.

    (1) Total Clarity Funds is a registered LLP authorised by the FSA offering a mixture of investment wrappers including pension funds which are maily tracker funds (launched October 2010) – They are (David Norman, author of the presentation included) Vested Interests.

    (2) All advisers recommending pensions are bound by the RU64 rule ie low cost stakeholder pension plan comes first and anything else eg Personal pension plan requires massive justification (info on the FSA website for those who wish to learn more)

    (3) Transparency on pension plans already exists and its quite easy to compare the RIY (reduction in yield) figures for one pension provider to another

    (4) Transparency on funds already exists and its quite easy to compare the overall cost by looking at the TER (total expense ratio) – this is indeed quoted on the Total Clarity Funds website (0.8% which in my experience is low) and other providers do the same.

    (5) Since the introduction of Low Cost Stakeholder Plans the take up of personal pension planning has declined – why? – pension plans are sold not bought and there is no margin in the product for either the provider or the advisory firm.

    (6) Low cost is best? Equitable Life & Stakeholder – end of story

    (7) If the public want low cost transparent product offerings they are available.

    I could go on……..and on……………………….finally Mark Dampier of Hargreaves Landsdown is coming in for stick in the comments section – he’s spot on

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  • general congreve says:

    @4 – Zero growth after fees then and negative growth after inflation. What inflation some say? Try this on for size…

    Just went to the supermarket to pick up a can of own brand supermarket soup. I prefer them to Heinz and of course the added benefit is they are cheaper. Well, about 18 months ago they used to be 44p each, then they went up to 52p, then today I see they are 59p. So let’s see in total that’s 34.1% inflation in 18 months, annualised equivalent to 21.3%.

    Now this is a pretty standard basic non-luxury item, which is not subject to massive discounting by desperate retailers just to shift excess units to make the bottom line look better (like TV’s at Currys for example). It’s about as real as it gets in terms of pure unfettered product. A bit of tin, a basic paper label and some basic ingredients, most of which is water in most of the flavours available (they are all the same price).

    Looks like I should have gone for soup instead of gold, because at 21.3%, it’s beating gold by nearly 2 to 1!

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  • we're all in this together says:

    My first pension company went bust so I went to the one I considered safest, no prizes for guessing who.

    Last year I met an insider, a retired pensions salesman who described the modus operandi thus:

    after about a year the advisor who sold you the pension will call on you for a review, and suggest various adjustments, which advice it will be in your interest to follow if you want to avoid poverty in old age etc;

    after another year or so the pension company will send a young sprog trainee to give you some more advice and make sure etc etc.

    This was uncanny, as it was exactly the pattern that happened to me. What I hadn’t realised was that each of these friendly advice visits resulted in a new plan, and a new set of charges.

    After a protracted dispute with this fine old British institution, they have finished investigating my complaint, and can find “nothing wrong.” Next and last resort (they kindly supplied a helpful leaflet) is the Ombudsman, which is probably a waste of a stamp as it is funded by the service it is supposed to police, and presumably knows which side its bread is buttered on.

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  • general congreve says:

    @5 – I advise you stop with that sort of revolutionary talk. Careless talk costs posts.

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  • [email protected]; everything is relevant and part of the bigger picture, a house is part of a normal life and everything in your normal life affects it.

    You could argue that a house is purchased or rented as part of a life package therefore other costs in the package need to be duly considered and accounted for for everything to balance out. Like a set of scales it has to balance economically so increased everyday costs, food. heating , transport, pensions etc etc all need to be considered in the balancing act. Any increase in costs if no extra money is on the table to will always affect the balance and will result in less money for bricks ‘n ‘mortar.

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  • @7 You had to find some way to bring soup into the discussion didn’t you?

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  • general congreve says:

    @7 – Hey, come on now estrader, soup’s fair game in these parts. I eat it in my kitchen, which is in my house, which will probably soon crash in price.

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  • Money makes the world go aground, the world go aground, the world go aground.
    Money makes the world go aground in a very funny way.

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  • general congreve says:

    @10 – It may be your and estrader’s opinion that everything is relevant in the bigger picture enuii, but on HPC some subjects are more equal than others. Now I suggest you both stop causing trouble with your free opinions, unless you fancy a little trip to the glue factory.

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  • The bottom line is simple to observe..

    ..look up the annuity offerings on pension pots @ 65, and then look up the life expectancy of 65yr olds..

    ..divide one by t’other, and you realise that the annuity providers anticipate a near negative growth on their investment (i.e total rip-off)

    This isn’t new – I clocked this over a decade ago – which is why I have never invested in a formal pension plan.

    My solution:

    1) Buy the freehold of an undeveloped industrial site.

    2) Lease the site to a company I control, who invest in ‘repairs and maintenance’ to the site (which is fully tax deductible), gradually developing the site into a valuable, commercially lettable prospect.

    3) On retirement, liquidate the lessee company, and let the site on the commercial market via a commercial EA.

    4) Live off the proceeds..

    – simples..!

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  • This is why people have been investing in property.

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  • gc, not everyone has the conviction, courage, or knowledge on investing in gold. I certainly don’t. But, i’m not adversed to hearing about alternative investments (On this site even). Gold or property or pensions, they’re all part of the larger mix. The latter 2 are more of interest as they affect me personally. But on a grand scale it’s always good to hear a bit about other things.

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  • truth is,the really successful people just say don’t watch the news or do anything through a broker

    investing in gold is easy….there are shops in london where you can buy ingots via their shop and open a safe deposit box via your high street bank

    simple and easy…..the time to buy gold of course was 1999

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  • general congreve says:

    @18 – If only all were as open-minded as yourself, unfortunately it seems the subject is inexplicably divisive compared to other investments, not only on HPC but everywhere it is discussed. It’s like Marmite and unlike pretty much any other investment I know (aside from housing on here maybe), it never fails to generate a wave of mocking and jeering from onlookers when volatility causes it to wobble in value. I mean, I haven’t visited a single forum or comments section anywhere, where the jackals come out and start cackling at the fall in value of peoples pensions, shares, commodities etc. What is it with gold?

    @20 – Not quite true. 1999 would have still been a good time, but really you should have bought a house in 1999, then sold it and bought gold in 2005 for maximum leveraged gains from your investments (thus far). Hindsight is a wonderful thing.

    As for missing the boat? It all depends on whether you fancy your chances in the already quite crowded, but buoyant, life boat (even if it is bobbing around a bit) or on the old cruise liner that is sitting dangerously close to the water line with waves lapping over the bow. But hey, you’ve waited this long and the liner hasn’t sunk, so why not wait it out a bit longer? If all else fails, you can always grab one of those emergency pension life rings from the stores, as I hear the Captain has reassured everyone they’re available and in perfect working order.

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  • @21 I have done a bit of research comparing House prices to Gold going back to 1975 and quite frankly there is never a bad time to start buying gold. There are times where you buy gold and there are times where you buy a lot of gold. Even if you started buying 1oz gold per month at the ‘worst’ possible time like the peak of the bubble in 1980 you would still be better off today than if you had bought property.

    Average house 1980 Q1 = £22,677
    Average house 2011 Q3 = £166,597
    Gold 2011 Q3 381oz = £399,516.60
    Total cost of acquiring 381oz of gold over approx 31 years = £110,353.71

    So, today, you would be able to buy 2 houses for only £110,353.71 spent on gold.

    People who talk about a gold bubble have bubbles for brains. I am not a gold speculator, I believe in sound money and gold is money. Speculators excessively concern themselves about whether the price is too high or low or whatever.

    The information is out there, it’s just a matter of putting it all together.

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  • general congreve says:

    @22 – Good work, that man!

    My example obviously pertained to the last decade or so, which is my time frame, as I didn’t enter the work force until 1997. However, that’s a great bit of research you’ve done there. Some would say that you should have just bought two houses in 1980, but that ignores the fact that, one, you’d have needed £45k right off the bat to do that, and two, £45k in 1980 was a huge shed load of money (two houses worth in fact!).

    I would caution that looking at the effects of the inflation on those pounds spent over the years, the end result of nearly £400k, might not be as impressive as it sounds, as gold has not kept pace with inflation since 1980 (one central reason why this bull market is set to continue). However, by the same token, once the money was in gold (in your example) it had a degree of inflation protection and was far better than having devaluing cash in your pocket (over the total time frame), i.e. £110k in incrementally devalued pounds.

    In summary, I’d recommend your incremental gold savings plan to anyone, especially now. Although it’d probably have to be revised down to one 5g bar a month for your average punter (if he can keep his hands off that new iphone/ipad/holiday long enough to put the money aside each month).

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  • buying gold or property with debt you can afford to pay is a proven strategy…even better if its with money you actually have.

    mainly because gold is usefull for jewellry and is also a currency in hard times..and property because you can rent it out(by room if necessary) or live in it.

    the trick is not to over leverage yourself to the point you can be liquidated
    unfortunately owning one property is so 1980’s these days..people need a portfolio of certain bankruptcy

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  • who stole my pension? says:

    My experience of having a personal pension with one of the big providers was that:-
    1) the pension fund considers the tax rebate as belonging to them rather than me. They told me “this is why the government pays it direct to them”!
    2) the fund provider changes the format of the annual report every year. I can only believe that this is to make comparison on the previous years statement with the current statement very difficult if not impossible.
    3) The government see’s the pension fund as a source of money that it can dip in to at will. Either by applying new taxes or by instructing the pension fund to buy high risk government bonds etc
    4) If people with priviate pensions complain then the government will simply “nationalise” the private pensions and tell us we can all have a state pension instead.
    In short private pensions are another rip off to add to the long list of rip off’s that the city has done e.g. Endowment mortgages, pension miss-selling, indemnity insurance, interest saving rates etc.

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  • general congreve says:

    @25 – Exactly. Be your own central bank, it’s the only way to be sure to keep their slimy lizard claws off your money.

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