The government set to interfere in the private pension system and set price caps!!!

Nice to have you posting again, Boris.

Thanks Mene.

Nice to see you back as well!

How come no ones mentioned that its nice to see me back?

I know one person its definitely not nice to see back, even if he did have 11 stand ins.

However I find it so strange that the Torygraph- one of the champions of unfettered free markets of all has championed that idea; and none of our usual suspects from the right who believe the free markets are so sacred and that the state should never interfere have raised the issue so far!!!

Pension IS not free market to begin with. When one pays into a pension one can get tax relief, ie contribution towards their pension. However if one didn't want to save via a pension but do something else like putting the money in a bank, there is no tax relief. Hence one IS 'forced' to take out a pension.

The idea of a cap is absurd because what happens when the costs exceed revenues? I think all pension fund companies should be non-profit organisations whereas all profits are invested and saved. This will make the cap unnecessary to begin with. Also no bonuses or silly high wages. All pensions should be tax free thus restoring Dear Leader Dictator Gordon Brown infamous theft. Perhaps this will restore our deteriorating pension industry before it becomes a bigger crisis.

Well Ski-Wiz as usual is almost consistant as he defends his free market ideology, good or bad and I like his position. However are taxes consistant with your vision of free markets?

The cap is still necessary and the pension funds would simply have to reduce their overheads perhaps by scrapping their ridiculous bonuses.

I agree with your suggestion that pension funds should all become non profit organisations as the running of our pensions is too important to be left in the grubby hands of those greedy cowboy dealers.

Northernlad

I like many others I am sure did miss your contributions during your absence, but we just don't seem to be as tribal on the Left as the right whingers on this forum are so we tend to individually fight our battles!!!

i,m more interested in the ridiculous figures issued by the government,
they say if you save 100 quid a month over the lifetime of a pension say 40 years,
thats 48 grand off your money,u,d be lucky if a pension company could turn that into a 100 grand,yet the looney webb reckons the charges alone could robb you of 170 grand fantasy island figures,
so  your 100 quid less the charges on the same scale must be worth upwards of 600,000 complete madness,so pension companys reinvesting your fees alone are making double what your investment less fees are making,

i'm making bets so I don't need a pension - its a gamble.

Oct 30, 2013 -- 6:13PM, 1st time poster wrote:

i,m more interested in the ridiculous figures issued by the government,they say if you save 100 quid a month over the lifetime of a pension say 40 years,thats 48 grand off your money,u,d be lucky if a pension company could turn that into a 100 grand,yet the looney webb reckons the charges alone could robb you of 170 grand fantasy island figures,so  your 100 quid less the charges on the same scale must be worth upwards of 600,000 complete madness,so pension companys reinvesting your fees alone are making double what your investment less fees are making,

Perhaps the cap should be restricted to funds that track the FTSE100?

After all they don't require much research or management.

The same could apply to any tracker fund.

the average pension is 25,000
half of all annuities are bought with pension pots of less than 20,000 and 30% are bought with pots of less than 10,000

yet the looney pension minister steve webb can say unchallenged that people paying 100 quid a month can lose 170,000 quid over the lifetime of a pension due to fees,the figures are ridiculous,mental with no basis in fact ,but hey he,s only a government minister and an annuity is only your most important  buying decesion ever

Actually you are wrong 1stTP as it would depend on the figures that S Webb was using.

£100 per month for 40 years......£48000 contributed.
Assuming average ROI of 7%.....£247,154.20 pension pot......interest £199,154.20.
Assuming yearly commission of 4.7% it will calculate as £170,391 as commission/fees leaving £76,108 left as pension pot to buy an annuity.

So S Webb was right if he was using the above figures or any other figures.

The loony appears to be you.

However if commission was 0.75% it will calculate as £46,167 as commission/fees leaving £200,958 left as pension pot to buy an annuity.

£200,958 - £76,108 = £124850 extra for one's pension pot with lower commission and of course less bonuses for the financial ''geeks'' and the directors, whom i do not give a toss.

As i'd said before, ' I think all pension fund companies should be non-profit organisations whereas all profits are invested and saved.'

Now, 'Pension IS not free market to begin with. When one pays into a pension one can get tax relief, ie contribution towards their pension. However if one didn't want to save via a pension but do something else like putting the money in a bank, there is no tax relief. Hence one IS 'forced' to take out a pension.'

What if one were to save tax free in a bank with tax relief, ie contribution towards their pension.

£100 per month for 40 years......£48000 contributed.
Assuming average ROI of 3% (4% less than the example above).....£91,718.99 pension pot......interest £43,718.99. Banks don't charge commission on savings account hence the lower ROI of 3%. Notice that the pension pot of £91,718.99 with a bank is £15,610.99 (£91,718.99 - £76,108) bigger than with a pension fund holder that charged 4.7% commission. It will also be lower than that of 0.75% commission but it is questionable whether the ROI will stay 7%.

Hence in a free market economy without silly interferences from politicians that comes with unintended consequences, people saving for their pension would have more choices and more competition in the pension market.

Shall I go further........why not?....bored at the moment.

Evil inflation.....3% on average over 40 years.

Bank - £91,718.99 will be worth £28,117.08 at retirement.
Pension fund with 4.7% commission - £76,108 will be worth £23,331.43 at retirement.
Pension fund with 0.75% commission - £200,958 will be worth £61,605.05 at retirement.

At this point if one were to think of a pension pot of £100,000 at retirement then the above 3 examples isn't good enough due to the evil inflation. However.

If one were to start work and earned £1000 per month and put 10% per month into pension for 40 years, starting at £100, because of inflation at 3%, let assume wages goes up 3% per year. Note this is for the same job and doesn't include promotions or automatic upward scaling of wages based on time served.

Bank - £386,191 will be worth £118,389.49 at retirement.
Pension fund with 4.7% commission - £281,396 (whopping £1,455,398 in commission) will be worth £86,263.87 at retirement.
Pension fund with 0.75% commission - £1,296,388 (less whopping £445,731 in commission) will be worth £397,416.61 at retirement.

Hence the lesson for those saving for retirement is to keep increasing their contributions in line with inflation.

so how are the looneys like me and mr average left with the average pension pot of under 30 grand,if 25 quid a week gets you 250 grand

25 quid a week gets you 250 grand

That would be £108.33 per month and whether you get 250 grand depends on how you save, ROI and commission. Taking inflation into account is another issue to bear in mind.

With inflation at 3%, 250 grand would be worth £76,639.21 at retirement.

I am not sure what your problem is?