Member Article

Many overpaying for pensions

A consumer watchdog has warned people setting up personal pension plans that they could be at risk of bad advice and high levels of commission.

The BBC reports that Consumer Focus have looked at individuals who have organised their own pension, and often found that they were advised ti switch to those charging high commission.

The group is now calling for the FSA to take action against the problem, which is costing consumers £200 million annually.

These problems also make it difficult for consumers to shop around for a good price because it’s impossible for them to judge the merits of deals.

Trail commission is also a problem, which requires the consumer to pay their advisor for the life of the pension over many decades without receiving any benefit.

While trail commission is due to be banned in 2013, Consumer Focus still want to make sure pensions are clear and understandable for the public.

Last year the Financial Ombudsman Service received 2706 complaints, and only 25% related to independent financial advisors.

This was posted in Bdaily's Members' News section by Ruth Mitchell .