Invested interests

Chancellor George Osborne did a marvellous thing in 2015 when he gave consumers the right to cash in their pensions (or “drawdown”) as an alternative to buying an annuity. Overnight a new market opened up and, inevitably, it has had teething troubles. The Financial Conduct Authority reports that many consumers are not shopping around and are being hit by “complex, opaque” charges expressed as percentages rather than cash amounts.

Two things need to change. First, providers have to offer easy-to-follow guidance about the full costs of the services they provide. Cash can be withdrawn to, say, make a large purchase, but drawdown can also involve investment decisions that cost money – and investors need an honest account of that expense.

Second, the Government should be going out of its way not just to open markets but explain to potential customers how they can be exploited. The FCA reports that some drawdown customers could be realising 37 per cent more return on their pension pot every year if they invest in a mix of products. Such details should be laid out with the creativity of those old British gas privatisation ads, “Tell Sid.”

The way that financial services work must also be taught in schools. If Britain shies away from instructing youngsters in capitalism, it’s no wonder that they grow up into consumers who fail to utilise it – or even socialists. When Brexit comes, the Government must use the moment of free-trade deals, lower tariffs and deregulation to expand economic education. Britain, formerly a “nation of shopkeepers”, is now a nation of consumers – and they await empowerment.