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the bubble-wrapped euphonium will do nicely
WHEN considering a stakeholder pension, try
to avoid standing in a queue at the Post Office behind someone
bubble-wrapping a euphonium.
personal experience, I can tell you that it doesnít get any better when
you get to the counter. This was my fate after putting to the test a
happy-clappy, "weíre-only-here-for-you" announcement from the
Treasury last year that stakeholder pensions were now available at post
offices. What could be simpler than just popping into my local PO and
getting a quick briefing on the ease and simplicity of stakeholder
repeating my inquiry twice, the look of blank astonishment on the face of
the postmistress only intensified. It was as if I had asked the first
class postal rate for sending nuclear particles to Tharg.
the word "pension" finally registered and I was then given the
advice I had so patiently queued for. "We donít do pension
inquiries here. You want the DSS down the road."
Second, there is no such thing as a "simple" financial product, especially one that involves a monthly commitment stretching over 30 to 40 years and also involving risk profiling and asset allocation decisions. The Post Office, with all due regard to its ability to sell stamps to euphonium bubble-wrappers, is not the first place you would go for a discussion on long-dated gilt yield fluctuations and geographic risk diversification.
there are signs that reality might just be creeping in. The government had
hoped to build on the "success" of stakeholder pensions to
introduce a raft of "simplified" savings products, sold through
a "simplified sales process".
now this proposal has run into flak from an unlikely combination of the
industry and consumer "watchdog" groups. The fear is that this
will expose consumers to mis-selling. Colin Brown, chairman of the
Financial Services Consumer Panel, says: "Many hundreds of thousands
of investors may be exposed to greater risks than they expected and if
things go wrong, they could lose money. It is tantamount to legalising mis-selling."
for the price cap, the Treasury says these are "essential components
in a market that is characterised by lack of price competition and
STRONG is the growth in financial services regulation, it cannot be long
before it starts turning in on itself and devouring its own posterior.
years, people have been encouraged to sue for pensions mis-selling, as
they dumped personal plans and scrambled back into the company pension
scheme they left. But suppose the company now goes bust and there is not
enough in the company pension fund to meet the liabilities: do you get to
sue the FSA for poor advice at the height of its mis selling crusade?
try this one: your capital and interest mortgage is paid off, but you
discover that you would in fact have been better off with a 25-year
endowment mortgage maturing even now. Do you get to sue the financial
adviser for not selling you the endowment?