Richard Harvey says it’s the guardians of the law that you’ve got to watch out for
An MP who is stepping down at the next election admitted the other day that politicians spend their time fretting over problems that don’t really exist, before devising wizard solutions that aren’t needed.
That’s an opinion surely shared by the thousands of savers who have stopped using their friendly neighbourhood IFA because they’ve been frightened off by hourly fees of £100 or more.
Indeed, it’s been argued that it’s only worthwhile using an IFA if you have more than £100,000 in your pension pot. So, thanks to the Retail Distribution Review introduced a year ago, smaller savers have been left to fend for themselves.
Thus, while politicians forged the almighty RDR sledgehammer to crack a relatively small nut of shady advisers who were selling unsuitable policies to earn fat commissions, the result is that those who need professional advice most have been scared off.
This, surely, is not what was originally intended by the government’s sweeping review of the financial advice market? And it has resulted in a classic demonstration of the law of unintended consequences.
What’s Yours is Mine, And What’s Mine’s Mine Too
Right now, you just know that, deep in the bowels of the Exchequer, Osborne’s civil servants are dreaming up new ways of sucking money out of private pensions. But then they would, wouldn’t they? Smug in the knowledge that their own pensions will fund a retirement of wine, women and song – or, given the public sector dullards I’ve come across, train spotting, fossil collecting and buying those beige windcheaters advertised in the back of the Sunday papers….
It’s baffling that, on the one hand, the government wants to encourage workplace savings into pensions. But on the other hand it can’t resist raiding those savings before, or indeed after, they mature.
No wonder so many young people are turned off pensions, and are convinced that history proves that investing in bricks-and-mortar is the best way to fund retirement.
So three cheers for the Institute for Fiscal Studies for making it clear that any further trimming of tax relief on pension contributions would be “complex, unfair and inefficient”.
OK, hands up if you believe that anyone in Whitehall will take a blind bit of notice……
Overdoing It
Meanwhile, faced with the dwindling purchasing power of savings, I know one or two folk who have become extremely skilled in the Arthur Daley-esque arts of spotting “a nice little earner”.
In particular, one of them has developed an uncanny ability of finding hidden treasures at boot fairs and garage sales. Recently she bought a vintage Dior jacket for less than a tenner and a Hermes silk scarf for 50p.
Her antennae for a bargain positively pulsated last month when she spotted an Italian handbag with an unusual clasp, and asked the stallholder to name his price. Quoted £5, she haggled like an Albanian horse trader, refusing to pay more than three quid.
“See, you can’t even open the bag”, she said. “Yes you can“, said the vendor, and popped the clasp. Only to discover, inside, several dress rings and three vintage watches.
Moral: don’t look a gift horse in the molars.
