The pensions transfer and mis-selling scandal of the late 80s and
early 90s convinced a huge number of people that pensions were generally
a waste of money - and anyone who sold one was a shark. But none of us
can live on thin air in retirement. As usual, there are two sides to
every story.
Compensation running into billions of pounds is still being paid out to investors sold the wrong product. Further, the "old" pensions regime was riddled with so many exorbitant costs and charges that making a fair profit - even in a fast-rising market - almost became an achievement.
First there was the initial charge - usually 5p in every pound you ever invested - and often more.
Then the first few years' payments were allocated to so-called capital units - not the solid, safe and secure vehicles whose name they carried, but merely an excuse to levy an additional 3.5% or so every year throughout the life of the plan.
Add in the additional annual management charge of up to 2% a year and it is not hard to see how easy it was to go backwards before you had even started.
Compensation running into billions of pounds is still being paid out to investors sold the wrong product. Further, the "old" pensions regime was riddled with so many exorbitant costs and charges that making a fair profit - even in a fast-rising market - almost became an achievement.
First there was the initial charge - usually 5p in every pound you ever invested - and often more.
Then the first few years' payments were allocated to so-called capital units - not the solid, safe and secure vehicles whose name they carried, but merely an excuse to levy an additional 3.5% or so every year throughout the life of the plan.
Add in the additional annual management charge of up to 2% a year and it is not hard to see how easy it was to go backwards before you had even started.
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