Hargreaves and IMA slam savings report
The Centre for Policy Studies paper, Putting the saver first, asserts lower prices and enhanced transparency would lead to more business but Hargreaves Lansdown states there is not much evidence to support this contention.
The report, published today (15 June), puts forward 104 recommendations for reform of the pensions industry; and, argues the industry should concentrate on giving customers what they want – which in 90 per cent of cases is simplicity.
Hargreaves Lansdown highlighted if lower prices pushed for by the report worked, investment houses and brokers would drop prices today and the business would flood in.
The margins would be less but the volume greater.
However, the intermediary revealed it found when it reduced its prices most new business came from transfers from competitors.
Hargreaves Lansdown also does not believe the component costs of a supply chain are helpful and a transparent total cost of investing is more helpful.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “We welcome initiatives which will reinvigorate this country’s savings culture and reduce the heavy dependency on unsustainable debt fuelled spending.
”Much of the rest of the CPS paper addresses issues which are already being resolved, such as the open market option, small pots, financial education and transparency of investment costs.
“Other issues are better left alone at this stage, such as pension tax relief, auto enrolment into Isas and early access to pension savings.”
Richard Saunders, chief executive of the Investment Management Association, said creating a positive long-term savings and pensions culture was of undoubted importance.
He said that was why the IMA had been working with its members for several months on industry guidance for better disclosure of fund charges and trading costs, which was due to be issued shortly.
He said: “While the report rightly focuses on some important issues, it also contains a worrying number of inaccuracies.
“These sorts of errors don’t help the debate and risk misleading investors, causing them unnecessary concern and potentially undermining the long-term savings culture that we need.”