James Coney  

Is the SJP business model a success?

James Coney

James Coney

Until SJP solves the problem of poor performance, or at least finds a suitable way to measure itself against peers, then this issue of the high cost of advice, which leaves you in a failing fund, will exist.

Wreaking havoc

Rip! And just like that, thousands of retirement plans were torn to shreds.

The switching from RPI to CPI as a measure of inflation was an inevitability given that the Office for National Statistics had been saying for years what an inappropriate measure it was.

That does not mean the difficulties faced by pensioners in defined benefit schemes, though, will be any less hard to take. On a simple measure, it equals around £89,000 less across a retirement for someone who starts on a £15,000 a year income, or £180,000 on £30,00 a year.

The real headache, though, is for those who had planned their retirements around the interaction of the lump sum and inflation-linked rises in their income.

Now with lower growth, it may pay to take a smaller lump sum and bigger annual income, particularly if it keeps them out of higher rate tax.

No one thinks of the havoc these changes cause.

Pension contributions 

There is some fascinating research from the Institute for Fiscal Studies, which finds that local house prices have no impact on how much people save in to a pension.

Secondly, it found that few older people pay extra into a pension when they finish paying off their mortgage.

Conclusion: we need higher contribution levels in auto-enrolment.

James Coney is money editor of The Times and The Sunday Times