Julian Knight: Barnardo's pension plan closure will not be the last

The charity's decision to end a career average pension scheme, just a few years after ditching final salary, is a warning to us all

Barnardo's has announced it's closing its career average pension plan and shunting staff into a far less generous and much riskier money purchase scheme. Such an occurrence would normally not merit comment apart from the fact that this is the second time Barnardo's has cut its pensions.

In the past it closed its final salary scheme in favour of career average. With the introduction of auto-enrolment into workplace pensions – pushing up employer costs and potential liabilities – and the advent of the Nest pension, Barnardo's move could be part of a further levelling down of workplace pension provision.

This is something I have been warning about for the past couple of years. We had the flight away from final salary in the last decade (apart from the cossetted public sector) and in this one we could see the disintegration of the "middle way" schemes, such as career average and replacement with money purchase, where what you pay into a pension, combined with performance, dictates how much you get out.

Hot on the heels of Barnardo's announcement, the Office of Fair Trading has said it will investigate money purchase schemes. The problem is that many such schemes levy very high charges, have poor growth records and are not transparent.

Employers, weary of the issue, are just glad to have somewhere cheap to park their staff and this means not only are pension benefits in effect being cut but the replacement schemes people are not up to scratch. This is mis-selling on a grand scale.

I have experience of this. I was considering becoming a member of an employer money purchase pension to top up my final salary scheme. I was shocked to discover, in the small print, that the pension provided by one of the world's biggest fund management groups had an annual charge about three times the level I could expect to pay on a standard personal pension I could set up myself.

I went straight to the company's trustees and they were unaware of this discrepancy. A year later, the fund management group lost its contract to supply the pension but it had enjoyed, by my reckoning, a decade of rip-off fees. I'm glad that the OFT has finally decided to look at these schemes and their charges.

At last some good pension news

We Britons are a miserable bunch. The biggest single reform to the state pension in our lifetime, which will benefit millions, was greeted with the tired old "work longer, pay more" line.

For the past decade we have been on course to wait longer and pay more for the state pension, but what the white paper, see right, promises is some reward for this new reality. A beefed-up state pension replaces a miasma of credit and top-up pensions – cutting through the chaff and letting people know precisely where they stand now and in the future.

The previous system – much of it constructed in a rush by Gordon Brown – relied on pension credits to top up a very variable state pension. These credits were only claimed by around two-thirds of those eligible and also meant people with a small savings pot faced an effective marginal tax rate of 40p in the pound. Unfair and giving out totally the wrong message.

There has been some gnashing of teeth over the requirement to contribute national insurance for 35 years rather than 30 under the old scheme. But it should be remembered that the 30- year limit was only brought in a few years ago and prior to that contributions had to be made for 39 years.

Overall, the pensions white paper is good news – it sweeps away complexity, guarantees a higher basic pension, while at the same time sticking to the idea that to qualify you have to make a fair contribution. Now, finally, we can move on.

Deadline confusion

Confused by your self assessment form? You're not the only one it seems. I received a HM Revenue & Customs press release the other day outlining acceptable reasons for failing to file your return online. The bods at HMRC said not receiving the online activation code, ID or password is an acceptable reason for late filing but further down the page they state that it most definitely isn't.

Advice wasteland woes

My comment last week on how it's ridiculous that changes to the rules governing how financial advisers are paid means we now have a choice of either paying a fortune or taking pot luck through execution-only has caused quite a stir.

There were offers of help for my friend – who had 10 grand to invest but couldn't find an adviser who would touch such a "small" amount – and support for my argument. I'd love to hear more from readers, who like my friend, are being turned away when looking for advice.

Independent Partners: 10 top tips for retirement. Get your free guide here

News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
News
i100
News
people
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
PROMOTED VIDEO
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
Life and Style
Dale Bolinger arranged to meet the girl via a fetish website
life
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Business Analyst (Agile, SDLC, software)

    £45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

    Finance Manager - Bank - Leeds - £300/day

    £250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

    Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

    £100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

    Trade Floor Support - Investment Bank - London - £350 per day

    £300 - £350 per day: Harrington Starr: Our client a leading investment bank is...

    Day In a Page

    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

    Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
    Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

    Meet the people who play with Lego for a living

    They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
    The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

    20 best days out for the summer holidays

    From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
    Open-air theatres: If all the world is a stage, then everyone gets in on the act

    All the wood’s a stage

    Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
    Rand Paul is a Republican with an eye on the world

    Rupert Cornwell: A Republican with an eye on the world

    Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
    Self-preservation society: Pickles are moving from the side of your plate to become the star dish

    Self-preservation society

    Pickles are moving from the side of your plate to become the star dish
    Generation gap opens a career sinkhole

    Britons live ever longer, but still society persists in glorifying youth

    We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor