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UK government blunder threatens efforts to end pension ripoffs
| Published: | 30 Dec at 6 PM |
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Just as the government seemed to be taking pensioners’ sides against rip-off charges by pension providers, an embarrassing blunder by the DWP may have put an end to the reforms.
Following the shocking results of an investigation by the Daily Telegraph into the UK’s major pension providers, the government instigated a consultation on capping pension charges at 0.75p annually. The impact assessment provided as by the Department of Work and Pensions has now been branded unfit for its purpose, as it failed to take into account the impact on profits within the pensions industry.
The Regulatory Policy Committee now considers the entire consultation paper to be in doubt because the impact assessment figures were flawed. Tens of thousands of British retirees at home and overseas have been conned into purchasing poor-value products without being given any legitimate options by corporate providers.
At least half of the major UK-based pension providers have heavily promoted annuities, a type of insurance now under investigation by City watchdogs. A highly critical report issued last week claimed that, for many, annuities are a licensed form of burglary which has trapped huge numbers of retirees.
Annuities work by handing over an entire pension pot to an insurer in exchange for a fixed annual income. One major insurance company has now admitted that anyone with more than £50,000 to invest would be better off using the drawdown alternative.
UK figures show that at least 80,000 people who would have been best served by drawdowns were sold annuities during 2012. Although figures for expat retirees living overseas are not yet available, they are expected to be in the tens of thousands.
The Financial Services Consumer Panel has concerns over opaque charges and exploitative pricing by commission-hungry salesmen. It states that the complexity of the process encourages irreversible mistakes by uninformed clients.
Following the shocking results of an investigation by the Daily Telegraph into the UK’s major pension providers, the government instigated a consultation on capping pension charges at 0.75p annually. The impact assessment provided as by the Department of Work and Pensions has now been branded unfit for its purpose, as it failed to take into account the impact on profits within the pensions industry.
The Regulatory Policy Committee now considers the entire consultation paper to be in doubt because the impact assessment figures were flawed. Tens of thousands of British retirees at home and overseas have been conned into purchasing poor-value products without being given any legitimate options by corporate providers.
At least half of the major UK-based pension providers have heavily promoted annuities, a type of insurance now under investigation by City watchdogs. A highly critical report issued last week claimed that, for many, annuities are a licensed form of burglary which has trapped huge numbers of retirees.
Annuities work by handing over an entire pension pot to an insurer in exchange for a fixed annual income. One major insurance company has now admitted that anyone with more than £50,000 to invest would be better off using the drawdown alternative.
UK figures show that at least 80,000 people who would have been best served by drawdowns were sold annuities during 2012. Although figures for expat retirees living overseas are not yet available, they are expected to be in the tens of thousands.
The Financial Services Consumer Panel has concerns over opaque charges and exploitative pricing by commission-hungry salesmen. It states that the complexity of the process encourages irreversible mistakes by uninformed clients.
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