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Pension savers to be given exact information on fund fees
| Published: | 14 May at 6 PM |
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The UK Financial Conduct Agency’s report on lack of transparency as regards explaining the true cost of fund charges may come as a relief to millions, but how will it affect expat pension savers?
The report is highly critical of the manner in which FAs conceal the truth about fund management charges, with advisors in the UK now forced to provide a single sum showing the cost of running the investment. The charge will be shown on annual fund statements, and is expected to improve transparency for investors over the frequently confusing mixed bag of charges previously supplied.
For many years, administration and trading charges have eaten into annual gains made by millions of investors, often leaving them with less true profits than if they’d simply saved in an offshore bank account. Sharp sales practices were often used by financial advisors to conceal high percentage levels of charges, especially in popular expat destinations.T
he FCA’s jurisdiction stops at Britain’s borders, leaving expat savers at more risk of mis-selling than their homeland counterparts. It’s essential that those thinking of investing in a fund get details in writing of its true annual cost, and also that advisors’ qualifications and local registration are thoroughly verified before any decision is taken.
Meanwhile, as the recent pensions shock begins to sink in, a survey has revealed that two-thirds of those close to retirement have decided to take full advantage of the new rules and withdraw 100 per cent of their pension pots. However, experts believe that those on final salary schemes should choose their options carefully, as the plan is possibly the finest pension ever offered, even if the government does decide to allow full cash withdrawals.
The report is highly critical of the manner in which FAs conceal the truth about fund management charges, with advisors in the UK now forced to provide a single sum showing the cost of running the investment. The charge will be shown on annual fund statements, and is expected to improve transparency for investors over the frequently confusing mixed bag of charges previously supplied.
For many years, administration and trading charges have eaten into annual gains made by millions of investors, often leaving them with less true profits than if they’d simply saved in an offshore bank account. Sharp sales practices were often used by financial advisors to conceal high percentage levels of charges, especially in popular expat destinations.T
he FCA’s jurisdiction stops at Britain’s borders, leaving expat savers at more risk of mis-selling than their homeland counterparts. It’s essential that those thinking of investing in a fund get details in writing of its true annual cost, and also that advisors’ qualifications and local registration are thoroughly verified before any decision is taken.
Meanwhile, as the recent pensions shock begins to sink in, a survey has revealed that two-thirds of those close to retirement have decided to take full advantage of the new rules and withdraw 100 per cent of their pension pots. However, experts believe that those on final salary schemes should choose their options carefully, as the plan is possibly the finest pension ever offered, even if the government does decide to allow full cash withdrawals.
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