Brennan should cap pension charges

SO the Pensions Board is concerned at the low uptake of pensions.

Fair enough — so is Social and Family Affairs Minister Seamus Brennan.

Indeed he is so concerned that he is considering legislation to compel workers to make provision for their later years.

This may be necessary, but rather than handing over the hapless consumer, as usual, should he not also regulate the service industry?

Let me show why. There is usually a set-up charge and an annual charge of, say, 1.5%. It doesn’t sound like much but, for convenience, take a fund of €100,000 and a growth rate of 6%. The broker now charges 1.5% of the entire €106,000. That’s €1,590, or over 25% of the growth, which is fair reward for the broker’s astute administration and competence.

But it gets better. Imagine a loss of 6%. The broker now takes 1.5% of the remaining €94,000, which is hardly a fair reward for his or her maladroit administration and incompetence.

Mr Brennan should legislate so that consumers have the option of a single one-off payment or an annual charge which would be a percentage of the growth rate — both to be capped.

Don’t tell me this can’t be done. If the charge for standard Personal Retirement Savings Accounts could be capped, then so can this.

Brendan Casserly

Abbeybridge

Waterfall

Co Cork