This country faces the most almighty pensions crisis. Maybe not today. Maybe not tomorrow. But someday and for the rest of our lives, we will suffer. Why? Because just about everything that can go wrong is going wrong.

People aren't saving enough.  People aren't saving for long enough.  People aren't saving in the right sorts of assets.  The right sorts of assets aren't even really available.  And the pensions companies simply don't care.  It's a grim picture.

We covered amount and length before, in our tale of Mr Grey, so we won't dwell on that now.  Instead, we'll grumble about the dearth of quality investment opportunities for ordinary people.  I am, in my own humble opinion, a fairly sophisticated investor.  I can read and understand accounts, and my audit experience helps a lot with grasping what companies do and how they make their money.  But investing takes time, so most people will turn to funds to help them diversify their portfolio quickly.

And funds are expensive.  Even though we've left most of the bad old days behind, where funds would charge upfront fees, or mask their charges by using incomprehensible bid/ask spreads, funds are still too expensive.  True, most funds can't get away with charging 5% per annum, as some - unbelievably - did.  But a 1% per annum charge is still extortionate in an era of low growth, low dividends and rising prices.  My defined benefit portfolio, which is in the mid 5 digits, has made about 10% in the last five years.  But the pension company has taken 1% in costs over that period - a full tenth of my gains.  And it gets its money whether or not the fund makes a positive return.

I had had enough, so I rang them to request a transfer into my SIPP, which has no annual charges.  They said they'd send out the forms and hung up.  Even this amazed me.  I was basically telling them that I would no longer be paying them a few hundred pounds a year, and they just let me go.  No sensible business  should do that.  They should have at least asked me why I wanted to transfer my money out.  Their complacency is alarming, but far from extraordinary in the tragedy that is the modern British pension.

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Filed under: Capital markets, Economics with tags idiots, pensions, sipp