Non-commissioned crisis

A few words of advice for anyone about to sign up for a personal pension from a life insurance salesman or independent adviser: don't do it. You could get caught up in a (you guessed it) personal pensions mis- selling scandal.

Next week the Financial Services Authority (FSA) will issue guidelines for would-be pension buyers. (Phone 0845- 606 1234). Financial salespeople will be told to stop selling personal pensions with massive upfront commission payments. Currently, an IFA selling you a pounds 200-a-month personal pension plan would receive about pounds 1,800. Not bad for a few hours work.

You may think all this is unjustifiable anyway, but it's been going on for years and these advisers have to make a living. For every client who buys a lucrative pension, they may have seen 10 people who bought nothing but got free advice. It's the same story across the whole crazy world of financial services. (You can beat the system - see page 11 for how to buy a last-minute PEP without paying a penny towards someone else's financial advice).

The clampdown on pension commission payments is down to Government plans to introduce stakeholder pensions in 2001. All workplaces that don't offer any pension scheme will have to offer a stakeholder pension. Many thousands of people will want to swap an existing personal pension for a stakeholder scheme at work. And the self-employed and others outside normal offices may also want to buy into these low-cost American-style portable pensions. (One attraction is that we'll be able to stick pension money into unit and investment trust funds run by specialist fund managers, which tend to perform better than many of the equity funds run by life insurance companies.)

The price of paying lots of upfront commission is that very little of your money may be invested for the first two years. Hence the FSA's move to ban upfront payments in the run-up to 2001. According to pensions researchers at BEST investment, worst offenders include Allied Dunbar and Legal & General. Add on some nasty penalties if you try to move your money within a few years of taking out the pension (step forward Norwich Union, NPI and Axa Sun Life) and you could have some upset investors.

There are cheap ways to buy a personal pension. Contact a discount broker such as BEST (0171-321 0100) and Hargreaves Lansdown (0800 1382121). Do you really want to pay someone pounds 1,800 to sell you a savings scheme?

i.berwick@independent.co.uk

Start your day with The Independent, sign up for daily news emails
News
ebookA unique anthology of reporting and analysis of a crucial period of history
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.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor