Calls for state cap on high pension fees and charges
THE Government has been called on to consider putting a cap on the charges and fees imposed on those saving for a pension after it emerged that up to €1bn a year may be swallowed up by fund fees.
A study has been commissioned by the Government into pension fund charges in this country to see how they compare to other states.
Now the Irish Association of Pension Funds (IAPF), which represents trustees of company schemes, has said a cap should be introduced if this country is found to be out of line with other EU states.
Jerry Moriarty of the IAPF said smaller schemes, and personal pension plans were particularly vulnerable to high charges.
"There is no reason why pension fees and charges should not come down. This is a big issue for trustees," Mr Moriarty said.
He said there was a strong argument for a limit on what could be charged, just as there is with personal retirement savings accounts (PRSAs).
Up to €1bn a year could be finding its way into the pockets of the pensions industry in fees and charges, a 'Pension Shock' documentary presented by George Lee on RTE 1 revealed last night.
Pensions expert Bridget McNally, a specialist in pension schemes at Maynooth NUI, said that there was a lack of transparency in the level of costs and structures in pension schemes.
Research by financial adviser and author Paul Overy has found that high pension charges can wipe out up to 68pc off the value of a fund for someone saving just €150 a month over 30 years.
Mr Overy said that there were lots of opportunities for pensions providers to take fees from savers -- annual management charges, bid/offer spreads, policy fees, legal fees, stockbroking fees and accountancy costs, among others.
"I believe legislation is needed to limit the charges pension product manufacturers can levy on pension policies."
Minister with responsibility for pensions Joan Burton said pension charges in Ireland were not predictable or transparent and there was every possibility of people being overcharged.
Mike Kemp of the Irish Insurance Federation said it was not something that the industry would have a problem with if there was a requirement to put more information out about the schemes, although there was a danger of information overload.
Consultancy practice PwC has been appointed by the Government to carry out the probe into pensions charges.