It took an edict from the Personal Investment Authority (PIA) to sort out many of these problems - in three weeks flat.
The statement demanded that anyone who buys a personal pension from now on will not be penalised ("materially disadvantaged" in the PIA's words) if they want to swap to a new stakeholder pension scheme from 2001 onwards. Charges on stakeholder plans are likely to be capped by the Government at 1 per cent a year.
The PIA statement marked the beginning of the end of the pensions industry as we know and hate it. A slew of big names, including Norwich Union, Allied Dunbar and Friends Provident, have already dropped their traditional policies, which take commission and charges upfront. These schemes erode the value of your pension for several years, making them useless for people who might want to swap to a stakeholder deal.
Suddenly, the life companies feel able to provide more attractive pensions. They have slashed commission rates and offer "level load" policies, where charges are paid every month over the life of the pension rather than being concentrated upfront. But many of these deals are not what you'd call cheap - a pension firm could still take pounds 10 for every pounds 100 you invest.
And you won't ever get that back so, in fact, you have been "materially disadvantaged" by buying a personal pension now rather than (say) investing in a low-cost individual savings account (ISA) and then swapping that lump sum to a stakeholder pension in 2001.
Among the giant life insurers only Legal & General has spotted this problem. It has said it will refund the difference between current charges on its personal pension (5 per cent of each contribution, a 0.5 per cent management fee and a pounds 1.50 per month fee) and stakeholder costs. The downside is that customers won't get the extra cash until they swap to a stakeholder, pension and so will miss out on the compound growth on that money. But even if it's not as good as charging less from day one, at least it's a start.
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