I had my car serviced for the first time in a local garage and was informed that one of my tyres was ripped and needed replacing and it would cost €125. I informed the mechanic I had a spare tyre and instead could he just swap the tyre.
When I turned up to collect my car after the service, I noticed that the tyre wasn’t replaced and the so-called “rip” was a scratch of less than an inch. Nothing that would fail an NCT. No money in changing a spare tyre I guess so the mechanic decided not to bother.
This is not just for the car industry, it seems to be everywhere. When one person or company has more information over another then rather than acting in their best interest it seems to be a red flag to make more money.
As you know I have a lot of knowledge, qualifications, expertise in financial matters relating to special needs. One of the areas parents often ask me for advice on is their pensions. Now before you stop reading thinking this is going to give me narcolepsy and you will have uncontrollable episodes of falling asleep while reading. If you bear with me I think what you are going to read will give you nightmares instead.
I am going to bang the drum again on the importance of becoming financially secure so that you can end up with a well-funded Special Needs Trust for your child.
To achieve this then you have to retire comfortably.
If you are one of the lucky people and have a Define Benefit pension then don’t worry too much as your employer has guaranteed your income in retirement. Even better most of these Define Benefit pensions will also pay a percentage of your pension to your child with special needs when you pass away.
Everyone else falls into the category of having a Define Contribution pension. This is where you and maybe your employer puts away so much of your salary each month to build up a pension pot so you can retire comfortably on it.
The problem is the rip off charges that are hidden and nobody takes any notice of them.
If you meet a pension advisor like my mechanic, it won’t be €125 you will be down but potential half your fund could go missing on charges and fees. This is not an exaggeration. You will retire on half the income you would have it you had no charges on your pension.
To be fair to the pension advisor, even he or she doesn’t understand the true impact charges have on a person’s pension because neither the insurance companies nor the training institutions ever deal with this issue. All the talk is about the commission.
Good news is the Financial Regulator is tackling this issue head-on and it is proposing a more open and transparent system where you will be more aware of all the pension charges and their impact. Everyone has to make a living and should get paid for the service they provide but nobody should make a living ripping people off.
Of course, I realise there are some parents who have no pension provisions at the moment. If you fall into this category then the good news is that the government is planning to introduce mandatory pensions where you, your employer and the government will contribute each month.
I recently did a course on this whole area and I am a strong supporter of the scheme after looking into the finer details. Believe me when I say that nobody wants to contribute to a pension but we will all be glad when it comes to the day we have to draw on it. When this scheme is opened up to all parents then I will be strongly encouraging everyone to join the new government pension scheme and at the moment it is proposing a low-cost structure that is fair.