Help fight financial jargon

YOUR MONEY Personal finance

Buying a financial product can be a nightmare, involving jargon- ridden sales literature in which it is difficult to understand what the policy is about or what charges are levied on it.

That is why we are launching a jargon-busting competition. Called the Great Gobbledegook Chase, the competition offers as a first prize two Virgin Atlantic Upper Class return tickets to New York, worth more than pounds 5,000, to the person who sends in the best example of incomprehensible financial wordage.

The winner will be the person who, in the judges' opinion, most humorously explains what the jargon means. To help future deciphering, the winner will receive a free copy of the Oxford English Dictionary. Two runners- up will each receive one too.

The judges will be Steve Lodge, editor of this section, and Richard Branson, whose financial services company, Virgin Direct, launched a new personal pension yesterday. The deadline for the Great Gobbledegook Chase is 18 November.

HATS off to Virgin. The company, which last year spearheaded lower personal equity plan charges in the industry with the introduction of its low- cost PEP, is set to do the same with pensions. Virgin looks like mopping up in the retirement savings market.

Its sales literature is clear, crisp and easy to understand. More important, the company's charges are among the clearest and cheapest around. Anyone who read our report last Sunday on how companies try to make their expensive products look cheap will spot the difference.

Significantly, those forced to halt payments in early years are not heavily penalised as with so many competitors.

At the same time, churl that I am, a few caveats must be introduced. Virgin's product invests in a fund which tracks the FT-SE All Share Index by buying stocks on a weighted basis. All the shares are UK-listed, which means there is no exposure to overseas markets. This can be a drawback in times when UK shares are in the doldrums but others elsewhere are not. At that point, rival pension funds will be able to hunt for value wherever it manifests itself, but Virgin's won't.

The Virgin pension is cheap for those who want to make significant monthly contributions. But for those only able to put away a more modest pounds 50 a month, the pounds 2 flat fee is a disproportionately large amount.

For that matter, Scottish Widows levies just 0.875 per cent in annual management charges against Virgin's 1 per cent. And if you want to transfer contributions within the first three years, Widows is cheaper still.

Mr Branson may have poached Debbie Moore, the former "Scottish Widow", to promote his products. But he doesn't have a monopoly on good ideas and some firms aren't far behind. It remains to be seen whether the industry catches up.

q Send entries to: Steve Lodge, the Great Gobbledegook Chase, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL.