Category: Insurance

In an unprecedented rebuke, the United Kingdom (U.K) pension industry’s leading executive admitted calculations of fees were misleading and based on spurious assumptions

Savers are losing money because nobody understands how much is removed from pensions and Isas in charges, the head of the investment industry has admitted.

In an unprecedented rebuke, the chief executive of the Investment Association said past calculations of fees were “misleading” and based on “spurious assumptions”.

Daniel Godfrey, speaking for fund managers who control £835 billion of savers’ money, said customers should be told in pounds and pence exactly how much was removed from their funds each year.

His highly-critical blog post, published on the trade body’s website yesterday, instructed the investment industry to end “twenty years” of hidden fees.

Savers should be given a “complete picture of all costs involved in the investment process”,Mr Godfrey said in landmark moment for The Telegraph’s campaign against secretive and excessive pension charges.

“We think [a full list of charges] will avert a continuation of the trap we’ve all fallen into over the last twenty years with disclosure [of charges] that nobody understands at best and which can be misleading at worst with spurious assumptions of accuracy being made that could lead to real consumer detriment,” he wrote.

The intervention was made days after ministers pushed through a cap on pension charges that will save middle-class workers £100,000 over their careers.

However, critics said Godfrey’s plans to tackle hidden fees were insufficient and would fail to end the rip-offs.

Historically savers have been told that around 1.5 per cent of their money is eroded by fees each year. Research has shown that as a result, workers typically reach retirement with just two-thirds of the money they could have accumulated. Yet the true level of charges would be nearer 3.2 per cent if hidden fees were included, industry insiders have said.

Under the proposals set out by Godfrey, pension and Isa providers will have to declare how much was removed from savers’ funds each year for most purposes.

But the information will be made available only once a year in lengthy and complicated documents, The Telegraph understands.

Customers will be presented with a table of 14 different “raw” numbers under headings such as “operating net asset value per unit” and “distribution of income units” and asked to use these as a basis for their own calculations.

Gina Miller, founder of charges campaign group True & Fair, said the new fees list would be “about as useful as an umbrella in a hurricane”.

“Ordinary investors will be given a table of what is frankly incomprehensible and incomplete data,” she said.

About 1,847 policepensioners who retired under the old pension system, the Defined Benefits Scheme (DBS), have been biometrically verification by the Lagos State  Pension Transitional Arrangement Directorate (PTAD), the Director-General, Nellie Mayshak, has said.

Mayshak, who made this known at the just concluded verification exercise carried out by PTAD in Lagos, said 2321 police pensioners were expected for the verification, adding that the Lagos Center was meant for pensioners from Lagos and Ogun States.

The Directorate is charged with the management of pensions under the Defined Benefits Scheme (DBS) for the attention of pensioners not transiting to the Defined Contributory Scheme (DCS). It is responsible for the Civil Service Pension, Police Pension, Customs, Immigration and Prisons Pension; and Pension Departments/Boards of Trustees of all federally funded Parastatals.

The PTAD boss said although some of the policemen have before now been receiving their pensions, the exercise will further ensure that no authentic pensioner is left out of the payroll while ghost pensioner will be fully eradicated. According to her, the exercise is been carried out in a painless manner such that the pensioners are not made to queue.

She disclosed that the Directorate commenced the verification exercise in December 8, last year from the Northern zone of the country noting that the exercise has been completed in the zone. She added that while the Directorate has commenced the exercise in the South-West, other geopolitical zones will also be done so that by the end of the first quarter of this year, they would have finished verifying all police pensioners in the country.

She said they started with police pensioners because of their large number and would carry out the same exercise for the  Civil Service Pension, Immigration and Prisons Pension; and Pension Departments/Boards of Trustees of all federally funded Parastatals.

Director, Pension Support Department of the Directorate, Mrs. Roz Benokagbue during the exercise said they concluded with Lagos pensioners’ on Thursday but those who cauld not make it before the closing date can come to the office in Abuja.

Benokagbue said they have also been going to conduct the exercise for those who have health challenges in their respective homes. She said: “We put a lot of planning into place to ensure that we have a seamless exercise. We make sure the pensioners sit down comfortably to do the verification instead of standing in the sun while we also provide them with food and drinks.

“We are taking the full biometric capture because the whole point is that we will never have to do this again. This is the only time we will call them together again for verification.

“In the future, we will just have a mild verification every six months, which will only require their fingerprint. This is just to show that they are still alive. We now have their full details and information.”