By now, we will have all seen the adverts – you know the one, where Theo from Dragon’s Den and Nick Hewer from The Apprentice talk about the changes in work place pensions and how everybody can now save for their retirement.
This is indeed a good thing and a big step up from the previous stakeholder legislation which simply relied on making pensions simpler in the hope that people would sign up.
Stake holder had limited success. Auto-enrolment hopes to move things forward. This time the shoe is on the other foot. People will automatically be enrolled into work place pensions and will therefore have to take their own actions if they do not want to save for their retirement in this way.
Auto-enrolment is very new. The legislation has only gone live a matter of days ago but already the knives are out.
On the 11th October the Pensions Institute published a report warning that smaller firms could enrol their staff in to old style schemes where the management charges could be as high as 4% p.a. rather than the new style work place pensions where charges are considerably lower.
Whilst it is fair to say that in the 80’s it was possible to find schemes which exorbitant charges, the introduction of Disclosure (in the early 90’s) and the introduction of Stake holder legislation led to a massive reduction in charges.
At Mantle Financial Planning, we are constantly keeping an eye on the charges of the plans we recommend – both to individuals and companies and wherever possible, we reduce charges as market pressures strive to keep pushing them down. It is possible that somewhere out there, there may be a scheme with a 4% annual management charge, but you wont find it in our world and to be quite honest, if such schemes do still exist, then somebody, somewhere hasn’t been doing their job properly.
It is a shame that at a time when everything should be done to encourage people to save for their retirement, misinformation and headlines about the threat of more pension miss selling will only make people turn away.
For more information on auto-enrolment, work place pensions and your retirement planning options, please contact us >>