Category Archives: Pension Truths

Pension Charges – How Can You Reduce Yours?

There is a whole load you can do in order to reduce your pension charges – in fact is one of the easiest ways of making sure your retirement is more secure.

That said, there are some problems with pensions. I’ve written about these over at my ‘Money Education’ website.

You can download my free Pension, Pension Charges and Tax Relief Myth report.

Until next time.


Trumped – Alternative Facts and Pensions


Everywhere you look this topic is in your face; pensions are  a must have, something you couldn’t possibly live without. But is  that the truth or hype?



Even in the most Trumpesque of moments I can’t help but think his ‘two types of truth’ line
applies to all of the pension providers and advisers in the UK, let me explain.

You’re bombarded with facts about pensions you can’t ignore, your later years will end up
in a kind of Dickensian hell if you don’t start saving now, and you have to save it with us.

Look at the tax breaks they claim, look at the benefits, secure your future, only fool would consider anything else, we are supported by the Government, given tax breaks.

Some alternative truths are these…

1. You’ll commit to paying charges on your pension right up until you retire and these
will be ongoing (probably in the region of 20% of your fund every ten years).
2.  The choice of fund in which to invest are likely to under perform the markets generally – statement of fact about fund performance.
3.  The value of your advisers business will increase because of their guaranteed income.
4.  A change in pension rules could massively impact your final pot (there have been hundreds in the last twenty years).
5.  With modern tax rules you can invest tax free (virtually) outside of a pension, only not
many in the pensions industry want you to know this.

Alternative truths or just the truth? You decide, but if you want me to help  solve your pension problems in the space of an hour, simply borrow me for an hour, it comes with a  fixed price and unlimited potential to make you more money. I’ll also tell you why rich people don’t invest in pensions – charges are one thing, but there are others.

You can  ‘borrow my brain’ to solve a problem quickly  and be safe in the knowledge you’ll make many thousands of pounds from just one hour of your time, and you can do that here or you can get on the list, it’s where I share my best stuff first, and that’s below.

Be stupid not get on the list.


Richard Smith - The Finance Zone If you want to get ‘cutting edge, financial information
the industry would rather you didn’t have. Send me your details below.
Remember – I don’t share your information. That’d be wrong.


State Pension Changes 2017

Do You Wanna Know a Secret?

State pensions are not about to increase massively, the @WASPI campaign for all of the women that have been treated pretty poorly buy succesive Governments are not going to get the result they want.

But Richard Harrington the new Pensions Minister still doesn’t have a clue  about the real world and nor is he telling the whole truth.

State Pensions have been eroded for years and look like they are going to continue in that way. Let me ask you a question, do you think your State Pension is likely to increase much over the coming few years?

For every year retirement ages are pushed back it will cost you least £6,000 under current rates of payment. And then there are the existing pensioner voters who have been kindly given a ‘triple lock’ – guaranteed increases in payment over their remaing lifetime.  All funded of course by those of us currently paying into the system but not yet being old enough to draw a pension.

For some specific guidance on this area of your planning you can ‘borrow my brain’

Steve Webb (who blocked @moneytrainers on Twitter) seems to think he’s done a great thing, and of course has been knighted for his work. Only… it’s us who are left picking up the bill for his great work.

Pensions are a problem.

  • Gilt edged Final Salary Schemes (think Teachers, Civil Service) have massive liabilitys that will have to be funded by future taxpayers.
  • The ever decreasing state pension will have to be funded by future taxpayers.
  • Auto Enrolment is putting fees (charged as percentage of funds) into the pockets of firms and advisers – with no explanation as to the options.

Pensions are tax deferred income, they are not the sole solution to a problem that’s been around for years and years. Taking income from those on low wages, forcing them to invest in a pension and then forcing them to pay the charges, and then having their final pot taxed is not in everyone’s best interest.

Do the maths on pensions, look at the fund performance, look at the charges. They are not what they seem and not a solution for most and certainly not the lower paid.

When you need some help remember you can borrow my mind and get some solid information about your long term future planning. Pensions have never ever made any one rich and nor will they now.

  • If you have old style pensions (before 2010) there is a chance you’ll be paying more charges than you need to.
  • If you don’t know how to extract the right information about your pensions.
  • If you don’t know what your State Pension is likely to be.

Get in touch. I’ll solve those problems for you free of charge. No problem.


Pension Charges

Pension Charges Cash Cow

NHS Pensions

Phillip Hammond speaks

Orignally article appeared on MoneyMarketing a few weeks back.

Hammond weighs in on pensions and property debate


The comments below are taken from the article and sum up some of these issues. There is a big problem with these schemes. Not only from a funding perspective, because the taxpayer is going to have to pick the bill up but from a fairness perspective.

Ordinary working members of the public end up with a crappy, high charged, non guaranteed pension scheme but those lucky enough to get a job in a hospital or the local council end up with a massive pension pot – in the main funded by us.

This cannot continue.

Duncan Gafney 19th December 2016 at 4:27 pm

Patrick as someone who works in a company that specialises in dealing with those in the Public sector, especially the NHS, the “myth” that they are poorly paid etc, is just that, it’s a myth. The contributions they make towards their schemes other than for those on bigger salaries has hardly changed, despite a massively increasing cost burden to the tax payer of supplying those schemes.

Take for example the NHS pension scheme, the only really substantive changes to it to reduce the cost, has been the change from the 1995 version of the scheme, where NRD was 60, to 65 for the 2008 scheme, now state pension age for the 2015 scheme. At the same time when changed to the 2015 scheme it was changed to career average earnings (adjusted for inflation) over the older final salary version. That sounds like a good change? Well at the same time they changed it to a 1/54th scheme, with no cap on service.

So now, we have gone from the 1995 scheme, which was a 1/80th + cash scheme with an NRD of 60, with maximum benefits capped at 40 years service, to a 1/54th uncapped scheme, with the only sop to the cost of it being the NRA being increased to state pension age and the “contributions” for high wage earners going up.

Cleaners etc are no longer employed by the NHS, so other than clerical staff and the such as groundskeepers, the lowest paid staff are usually nurses. However like all public sector employers, earnings are partly down to the job you do, but also massively down to how long you have worked there, with guaranteed service related pay increases, such that in the literally hundreds of retiring nurses I have reviewed the pensions off, less than 5% are on a full time salary of less than £40kpa, most are on £40-50k FT equivalent and significant number are on £50-60k+ FT equivalent. The fact that they don’t get major promotions over the years, means that career average actually frequently works out more beneficial than a slightly lower acrual rate with a final salary link.

So now we look at the contribution levels. Most will be on a 9.3% contribution rate, but given that they will also be into higher rate tax, the actual “net cost” to them becomes only 5.58%. So lets assume a starting pensionable earnings now of £28k and their actual contribution rate now is £1,562.40pa net. If we assume the equivalent of say 4%pa pay rises over their career and assume a 40 year service record by the time they reach their NRD, the total cost to them in 40 years time would be calculated to be approx £156,000. However by this stage, their earnings would now be approx £134,500 and based on that, (and assuming that the revaluation rate averages 2%pa) they would then receive a pension of approximately £71,682pa. Even if we assume that annuity rates had risen a little bit by then (seems unlikely) to say 3.5% for index linked annuity with the appropriate indexation, spouses benefits etc, the capital cost of that income would be £2,053,200. Yet they wont have even paid in 1/10th of that amount. Even if we assume that their contributions were invested throughout that period (which they won’t be, because the whole scheme is unfunded), if we assume that a net rate of return of 6%pa was achieved, then that would provide a fund of £429,000 after 40 years, compared to the cost of £2,053,000. Even if we increased the average rate of return to say 7%pa, then the fund still only reaches £531k. As such the actual funding level required as a “tax payer” contribution to make the numbers add up is at least 4 times the net personal contribution level in other words its 22%.

So are you honestly trying to suggest that even with the changes, that this scheme is not MASSSIVELY generous and unsustainable by the tax payer, even before we take into account the unfunded nature of the scheme.

Hell if we assume that 1.5m people work for the NHS at any one time and that this is the average (which is in reality much higher, because of the huger numbers paid large salaries) and assume an average retirement life expectancy of 30 years, this means that there will on average be 1.125m NHS pensioners at any one time, receiving an average of in todays terms circa £25,000pa each. So in todays terms, that’s going to cost the tax payer £28bn a year, just for NHS staff, now add in all the other public sector schemes, most of which are unfunded and the cost is going to be at least say £75bn a year, which is 14% of the total tax take! Just to pay out for public sector pensions.

Concerned about your NHS Pension, you can borrow my brain and get all the guidance you need.

State Pension | Pension Changes

1995 and the Pensions Act of the same year gave us a number of changes, one of which was the equalisation of State Pension ages – making boys and girls retire at the same age, eventually.

This post is available as a download – State Pension Changes 2016

Of course the changes were blamed on EU law, but the truth is everyone knew that there was not enough money to keep the pension system afloat, and the Government of the time was helped through the changes by simply stating – it’s not our fault, the EU made us do it.

Not sure about you, but I was 34 at the time. Heavily into building my career as a financial adviser, and was about to add my first child to the family – and of course any increase to the State Pension would not affect me for some 31 (thirty one years) so nothing to worry about.

More change arrived a few years later in 2007 when the State Pension Age was further increased to 68 (not sure about you but I can see a trend coming here), and again in 2011 in the Pensions Bill there were further changes made.

Like you, I was not concerned about these increases then; far too young and with a range of other priorities like a mortgage and getting my two children through their education, at the same time trying to hold a marriage together – pensions could wait.

As I hit my mid fifties, the pressures changed as they do for us all. It’s more about planning a few more weeks away from the office, rather than concentrating on the hussle and bussle of business life. This of course has given me some more thinking time, and I have realised this, I have been royally shafted and it doesn’t feel nice.

Here’s The Story.

Despite the politicians of all colours telling us we have never had it so good and with the changes made [by them] everything is great, so here are the facts. Ready..

State Pension Age Changes – have cost me over £15,000 in lost income and my wife over £12,000 as they have moved my pension age to 68 with no compensation, for us it’s a £27,000 grab. How much have they cost you?

Obviously, something had to give as there is not enough National Insurance coming in to pay pensions, we are living longer and now retiring later. This was spotted in the late 1980’s.

Expect this trend to continue.

[emaillocker id=”1367″] [/emaillocker]

If you are reliant on your State Promise (Pension) expect it to be reduced even further. It’s been on it’s way down for the last thirty years or so, a fair bet is that this trend will continue. Something about one of Isaac Newton’s Laws springs to mind.

At roughly the same time Pension Freedom arrived – another little gift for advisers and the pension industry. Of course if you are are pension provider, you want more pensions and they have certainly got that.

No matter what you try and do with your pension pot, someone else maintains control of it and charges you for the privilege. If you have what they call ‘safeguarded’ benefits of more than £30,000 it’s another nice gift to the industry because you are forced by law to take advice from a suitably authorised adviser – and there are not enough to go around. The industry has collapsed in recent years.

This special breed of adviser, that you are forced to use can charge what they like. I have recently been quoted 5% of my fund in order for one of these advisers to give me some advice. Given that you can do nothing about it, if you want the ‘freedom’ you have to pay it does seem a little unfair.

Ongoing Charges – with modern investment management tools making changes to your pension investments is simple – point and click in the main. Despite that advisers get a favourable treatment in relation to VAT on their services (exempt) and chunk of your pension fund every year for what they call – ongoing management.

It’s a bit like using a Solicitor to purchase your house (still far more complex than the setting up of a pension) and the firm coming back every year to take a small slice of the current value – and you not being fully aware of it being taken and the Solicitor not having to raise an invoice for it. I doubt you get a pension statement every year that shows in big letters on the front of the statement – ACME ADVISERS HAVE BEEN PAID £x FOR THEIR SERVICES.

What you do get is a paragraph on page seven of eleven stating the charge.

Auto Enrolment, another gift for the industry “Mandatory Pension Contributions” with fixed charges and no guarantees of anything. No matter how bad the investment returns are, no matter how bad the administration standards are, the provider still gets paid. And they make you jump through ‘burning admin hoops’ if you dare want to move YOUR cash.

And still the industry crows on about the efficiency of pensions which is a myth.

It was Steve Webb – the only pensions minister to really tell the truth about pensions, he stated that “pensions are tax deferred savings” not tax free. Of course there maybe some tax breaks, but they are just that breaks. Eventually someone has to pay tax on pension benefits drawn from any pension. If not now then whenever. This of course guarantees a return of at least some pension to the Government via income tax, in return for the tax breaks they are rewarded very nicely. No risk and close to a guaranteed return, without even having to cover any of the costs of the investment

What Else? Well, our man in the Treasury has been on rant for a few months about charges.

Indeed George Osbourne has announced reviews into Pension Charges. The way he talks it seems like something may happen. However another of Newton’s Laws is in play here, if there is no force on an object it doesn’t move. It’s a law.

Nothing has changed yet, no force on it. The providers retort is simple – there are contractual obligations. Something every regulator has known since regulation. Don’t expect things to change anytime soon.

I set up MoneyTrainers to teach non financial people some of these truths – as a qualified and experienced financial consultant I know a little about how these things work.

Two Realities

I have never met anyone who thought that locking hard earned cash away for 40 years or more was a good plan to become rich, and certainly not one that was dipped for charges every few days.
Despite a good a good run at things successive governments have not made pensions work for the masses, of course a few years ago they made sense as a planning exercise

If you are a teacher, work in local government or are an MP your situation is a bit different.

Under the Principal Civil Service Pension Scheme (PCSPS) The taxpayer picks up the cost of your valuable guaranteed pension. The current liability (to be funded by you and I) is £194,838 million based on the last accounts (14/15) and it’s running costs are in the region of £61 million for the same year.

The Teachers Pension Scheme is also an interesting one. With an unfunded liability of some £200b (that’s right billion) according to the accounts in 2012 (can’t find any later ones). It’s clear that money to fund all of this has to come from somewhere, just don’t delude yourself it won’t be you, the probability is that it will.

Pensions Four Things You Should Do Today

Get out.

Since I left the industry in 2010 things have changed a lot, but the industry really doesn’t want you to know that.

More on Pension Charges – PDF

I have a Pension Resource Pack available (free of charge) if you want uncover the truth about your pensions. Get in touch >>Contact<<

Principle PCSPS

Teachers Pension

Pension Charges 2017

Pension Charges.

Over the last couple of years I have written a number of articles about pension charges and specifically how they impact on your retirement . In 2017 this is as valid as ever.

My report, written for Alan is below.

Please get in touch when you want to discuss this in more detail. Discuss My Pension

Pension Freedoms | Jeremy Clarkson On Pension

Pension freedoms will be with us very soon. Some of you will be taking advantage of the new options with effect from a few weeks from this post.

There are some problems with pension freedoms that most of the financial advice sector is not being completely honest about; fact is pension freedom is likely to be as much in favour of the industry and the advisers, as it is to the likes of you.

Yes you will soon be able to free up some cash from your pension and you can make some changes. And you should. But you should absolutely not accept what your provider or you adviser tells you to do.

The reasons are laid out below.

1. You will not get the lowest level of charges – which makes pension freedoms one of the worst things you can do.

2. You will not get the right choice of investment funds – over 70% of managed pension funds don’t beat the index.

3.Your adviser and provider- could well be earning as much as you over ten years.

MoneyTrainers provides training and education so you can make the most of your money, including pensions.

Enjoy the video below – Clarkson kind of gets where the industry was and is.

Contact me today in order to discuss your options.

For your Free Online – Money Course send me your details below.


Money Trainers Pension Reforms.

Interested in the pension changes that are coming. Would you like  to find out the truth about pensions. What they actually do.


Send me your details below and I will email you the documents as soon as  I can. If you have a pension plan worth £100,000 this information will be worth £30,000 to you in reduced charges I guarantee it.

Your information is not shared, loaned or lent outside of us.

For your Free Online – Money Course send me your details below.