Although often overlooked, the cost of investments including initial and exit charges, annual management fees and platform fees, can have a significant impact on the performance of investments over time.
Some older investment products, including pensions, have significant charges and exit penalties which may prohibit people from moving these into a more suitable investment with lower fees.
This highlights the need for people to review their investments regularly to check that they are still suitable for their needs and are performing in line with their expectations.
Pensions need to be reviewed regularly and in particular, in the 10/15 years ahead of planned retirement. If you have a number of older pensions from previous employment, it may be worth reviewing whether to consolidate these into your current pension. You will need to consider whether older pensions have exit penalties or protected benefits such as Guaranteed Annuity Rate, and you may wish to take advice.
Millions of savers who were sold pensions and other financial products in the Seventies, Eighties and Nineties are likely to be given a fairer deal after the City regulator announced it had found evidence of companies mistreating loyal customers. Here’s what you need to know. What’s the issue? Savers have been trapped in plans with high charges that could wipe out returns but are unable to move to another provider because of huge exit fees. The Financial Conduct Authority (FCA) has been investigating the charges, which apply to pensions, life insurance policies, endowments and investment bonds that are active but no longer open to new business, for the past two years. It believes that some insurers have been unfair to customers holding these “zombie” products, which may not be actively monitored, by failing to be transparent about the charges.