None of us likes to pay more for goods and services than we have to. Human nature is to look for a bargain.
With some tangible products cost comparisons are pretty straightforward and relatively easy to do.
It is more difficult (but not impossible) to cost compare intangible products and a good example of this might be your pension plan.
Labour has decided to ‘bang the drum’ about the charges applied to employer sponsored pension scheme claiming that some are simply too high.
You won’t get much of an argument about this from me because I believe that costs should be transparent and understandable.
But the cynic in me thinks that the new ten point plan from shadow pensions minister Gregg McClymount is a bit of a smokescreen and a thinly veiled attempt to take some of the credit for the upcoming removal of commission from pension products.
It is also entertaining that what Labour really wants is a very low annual management charge (probably below 0.5% per year) which is a bit rich coming from a party that introduced Stakeholder pensions with an annual charge of up to 1.5%.
Still we can’t expect politicians of any party to remember what they have done in the past!
However, Gregg and his colleagues badly miss the point when they start waxing lyrical about pensions issues. So here are a couple of questions for him that I suspect he will not answer because a) he doesn’t know the answers, or b) because it won’t be politically comfortable for him to answer:
1 – Which matters the most in determining the best possible pension at retirement, is it a) the level of contributions paid or b) charges? (if the former why are people not saving enough in their pension plans do you think?)
2 – How much money has been extracted from UK pension plans since 1997 when Labour introduced their ‘stealth tax’ and started taxing UK dividend income at 10%? (is it a) nothing at all, b) less than the amount claimed by politicians as “expenses”? or c) in excess of £100 billion?
3 – Is the amount taken by the stealth tax a) higher or b) lower than the charges being complained about?
4 – Do people not save in pension plans because a) charges are too high? b) the rules and accessibility (as a result of constant political tinkering) are too complex or c) economic conditions are such they cannot afford to?
I am not holding my breath expecting an answer from Greg after all Labour, like love, is never having to say you are sorry.
Photo credit: Flickr/Johnny Grim
