Hidden charges and exit penalties in pensions and other investment products.
Charlie Weston personal finance editor for the Irish Independent, interviewed Patrick Sutton, partner of O’Kelly Sutton Accountants,Kildare on the 6th of August 2012.
Finance expert Patrick Sutton, of O’Kelly Sutton accountants in Kildare, said many pension funds had been badly invested, causing losses of between 30pc and 40pc.
There was increasing evidence of consumers being overcharged for pensions and life policies, particularly if the policies were bought through life companies.
I had come across situations where management charges were as high as 6pc to 7pc on pension payouts rather than the more usual 1pc.
I warned about a situation where an insurance company held back €21,000 out of a €74,000 pensions pot when a client wanted to retire at 60.This was because the salesperson had set up the pension for the client to retire at the age of 70, to get more commission.
Many pension holders were only now finding out that their funds had been badly invested, and they were seeing losses of between 30pc and 40pc.This was because the funds were not moved out of high-risk investments at an early enough stage.
The big firms don’t effectively monitor the funds even though management fees are being paid.
Funds were chosen which were incompatible with clients’ attitude to risk. In many cases pension funds were not looked at for years on end. We have seen examples where individuals were paying on several policies, at higher costs, and no one advising them to stop and take another look at what they are paying for.
In some cases the small print will mean it’s difficult to get paid out on life cover or critical illness policies. Patrick Sutton, O’KellySutton, Accountants & Consultants, Kildare, Co. Kildare. www.okellysutton .com