It has come to light that some pension firms are not behaving properly over the new pension freedoms given to over 55s. Enables experienced IFAs of Bishops Stortford are aware of a two-year investigation by the Financial Conduct Authority found that some savers were accessing their money through some of the most expensive arrangements. Savers were sometimes being charged four times as much as those accessing pension funds with cheapest deals. The FCA he City watchdog has even warned that it might have to impose a price cap.
The FCA said that pension freedom charges were hardly transparent in fact they are often quite “opaque”. This means that many of the 1.5 million savers who have so far accessed their savings under the new pension flexibilities might not know how bad a deal they had been given. In the worst case scenario investigated, someone investing a £100,000 pension pot in a flexible access fund was left £36,781 poorer after 20 years than they would be on many of the cheaper deal. The regulator also challenged the complexity of many of the pension products, some of which can contain as many as 44 different types of charges.
“It seems that companies are deliberately making their charges difficult to understand so customers … don’t know how much they are paying. If even I cannot understand all the different drawdown charges then how are customers meant to understand them?” said Billy Burrows, from financial advice firm Better Retirement Group.
“It is disappointing that the FCA has stopped short of calling for a charge cap on pension drawdown products that could stop consumers from sleepwalking into costly and confusing products that can drain the money they need for their retirement,” said Jenni Allen, managing director at Which? Money.
If you want to look at how best to continue to invest your pension funds Enable’s IFAs in Bishops Stortford can talk you through the best options for you.
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