Pensions 'supermarket' to offer workers low-cost funds
WORKERS saving for a pension are set to get a new low-cost option to help them put money aside for their retirement.
Stockbroker Davy is aiming to become the 'Ryanair of pensions' with the launch of what is being called a supermarket for pension funds -- with the company saying people will be able to start a retirement fund for as little as €500.
The wealth management company is aiming for mass appeal with an online offering of 10,000 investments that pension savers can choose from.
There will be no set-up fees, no dealing fees and no exit fees -- although there will be a management charge.
Pensions experts said the new offering had the potential to shake up the pensions industry, which has been heavily criticised for high charges and poor investment returns.
The new Davy Select pensions option will allow consumers to switch between hundreds of funds with no switching fees and no exit charges.
The launch came as a new survey revealed that members of pension schemes have been besieging their employers over fears their pension will not be what they had expected and are also complaining about high charges.
The survey -- by pension advisers and administrators IFG Corporate Pensions -- found that 87pc of firms say their staff have criticised the performance of the company pension and the lack of visibility on charges.
It asked human resources and finance professionals in charge of corporate pension schemes to indicate the change in the behaviour of pension savers.
Fionan O'Sullivan, of IFG Corporate Pensions, said: "Employees are finally realising that with the growing levels of negative equity, their pension represents their primary and, in some cases, their only asset."
Davy's new online pensions supermarket is a change of direction for the stockbroker, which until recently only ever targeted the very wealthy.
For the first time, people investing in a pension will have access to a range of investments run by highly-regarded US money manager Blackrock.
Davy's Ciaran O'Donoghue said the new offering will be available from brokers.
His firm would give back all the normal fees charged by pension fund providers. The annual management charge would be 0.75pc of the assets in the retirement, compared to a more usual 1.5pc to 2pc charge. Some fees for Davy Select funds would be higher. People using the new service would have the choice of paying slightly more to get financial advice.
Chief executive of Davy Stockbrokers Tony Garry said pensions were under huge pressure in this country.
One in two people did not have a private pension, while eight out of 10 defined-benefit schemes were in deficit.
Traditionally, defined-benefit funds promise to pay out a pension based on the final salary and the number of years the member was in the scheme.
And Mr Garry said the Government was not helping matters because of a lack of leadership and direction on pensions policy.