All In This Together - Part 1

David Cameron has said we are "all in this together" as the country battles the financial problems such as the mega deficit. It has been decided that richer types won't be getting child benefit from 2013. They don't need it and it will save £1 billion. I don't need the winter warmth allowance, so I'm happy to give that one up. But is everyone playing with the same bat? I suspect those in the "financial services" industry are not yet in a mindset to play nicely.

The bankers are still getting stick from the public. This is partly I suspect because they don't want reform that will expose some of their murkier transactions. Banking was once an honourable profession. It is now infected by the practices of spivs and charlatans. I know of a number of good people who have left modern banking because their consciences were sorely tested by what they were asked to do in order to get a sale.

If we are "all in this together" then those in the financial services need to be properly in with us. When it comes to pensions most of us believe we are dealing with honest brokers. However, this may not be the case. Most of us thought the Robert Maxwell days were gone. But we live today with pension deficits. Why? Because companies have not been paying into the funds. Shortfalls abound everywhere. The Post Office pension fund is a disaster masquerading as a genial leviathan. If ever the outfit is privatised it will be the taxpayer that gets this actuarial monster to deal with. And yet more liability will be heaped on us. The governance of pensions has been left in the hands of the incompetents and handwringers. Not only are the contractual elements of pension funds being flouted but those in power seem not to care. Let the coalition government shine a light on these pension deficits.

Transparency is hard to get in the pension world. BBC Panorama is exposing the collossal fees taken by private pension funds. Pension-selling companies are taking the equivalent of 80% of money paid into some pension plans out in fees and commissions, Panorama has found. In one HSBC pension plan, £120,000 paid in over 40 years would result in fees and commissions totalling £99,900. How much, HSBC? And this organisation used to be run by an Anglican priest. Surely he had some idea of this daylight robbery. HSBC just replied that its pension product is competitive. BUT THEY JUST DON'T GET IT. It is precisely this weasly way of working that has got the banks into such a dim light with the public. Shanghaid indeed! Perhaps when the reverend gent becomes a trade minister he can advise the prime minister on how to clean up this pension fiasco? He and Vince together, the Dynamic Duo. Angela Knight watch out!

Malcolm McLean is a pensions consultant. He says, according to the BBC, that the problem is a lack of transparency when the pension is sold and what seems like a small annual percentage charge grows each year in real terms as the fund gets bigger. "You suddenly find that after 30 or 40 years there's a terrific amount of money lost and I don't think many people actually understood that when perhaps they took out the pension," he said.

Lack of transparency, eh? Well, if we are "all in this together" let's have these pension providers being honest and open. By all means take properly earned fees. Nobody can run a business without a profit. But this is ridiculous. How much of this excessive skimming off the top goes into bonuses? Dig deeper Dave! We need answers.

The city has an expression for poorly performing funds. They're called dog funds. And I expect they come with all the crap as well!


Panorama site