Personal Finance: Millions of people are stuck with pensions taken out when companies charged whatever they wanted
Saturday 10 October 1998
Over the years it has provided an invaluable service by publishing, time and time again, performance figures for the scores of companies supplying a wide range of financial products.
This month's issue does sterling work on the personal pensions front. Its findings make frightening reading: if you invested a single premium of pounds 10,000 in a pension fund which grew at 9 per cent a year, after 15 years, the fund would grow to pounds 36,425 if there were no charges levied on it. Obviously, that is completely unreasonable: all fund managers and providers and salespeople must make a living somehow. So it is easy to see, for example, why Equitable Life might want to take pounds 3,303 in total charges over that period, or Norwich Union could levy a fee of pounds 4,527.
But how on earth can Nationwide Life justify grabbing pounds 7,812 out of that same amount, or Eagle Star taking pounds 8,131, or Skandia Life charging a whopping pounds 9,849?
The same picture applies to regular premium pensions, where over the same period, monthly contributions of pounds 200 would build up a plan worth pounds 73,856 without charges. Winterthur Life makes do with pounds 5,341 in charges and Equitable Life with a couple of hundred quid more. But United Friendly clearly believes it needs to take away pounds 18,000-odd of its policyholders' cash, while Sun Life of Canada's salespeople can't survive unless they grab almost pounds 14,500.
Some companies will argue that they have acted to bring down their charges in the past few years. That is true, a fact which Money Management recognises - among a few companies at least.
For example, Eagle Star, the high-charging provider named earlier, has brought out a highly competitive and flexible pension. But that still leaves millions of policyholders stuck with contracts devised five or 10 years ago, when life insurers felt they could get away with charging almost anything they wanted - and did.
Moreover, until 1995 it was virtually impossible for would-be customers to tell what they were being charged, because life insurers were only required to provide details of the average for the whole of the industry.
So I have a proposal to make. It strikes me that if a person signs a contract with a company where the charges are not explained, or are done in a totally impenetrable way, that's an unfair contract.
Why doesn't the Office of Fair Trading investigate those companies and their contracts under the Unfair Terms in Consumer Contract Regulations? It could require companies in breach of these regulations to place all their policyholders on a fair contract, perhaps even backdate compensation.
The OFT is a very busy organisation, so perhaps it ought to pass on its powers in this area to the newly-formed Financial Service Authority, the financial watchdog. Then the fun would really start.
Will your credit card rewards be scrapped following new EU rules on charges?
What would happen if you put a statistician in a casino with £1m?
Simon Read: 'Has Phoenix done it again on charging too much for its life policies?'
Simon Read: 'The fight must go on over equality on expat pensions'
Pension freedoms: How to deal with cold calls from scammers
- 2 Smartphones are making children borderline autistic, says psychiatrist
- 3 Why this father didn’t hide his daughter’s heroin overdose in her obituary
- 4 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
The sickening truth about food banks that the Tories don't want you to know
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...
Day In a Page
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms