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Money Box: Pension crackdown; Child benefit fine warning; Outing closet trackers

Pension crackdown; Child benefit fine warning; Outing closet trackers

21/09/2013

BBC Radio 4 - Money Box, Pension crackdown; Child benefit fine warning; Outing closet trackers

Paul Lewis on the charity which had 60 fraudulent direct debits taken from accounts.

Crackdown on charges that eat away at pensions, child benefit fine warning, outing the 'closet trackers', and the charity which had 60 fraudulent direct debits taken from accounts.

The Office of Fair Trading says £40 billion pounds of pension money is tied up in funds that give poor value for money. Most of it is in old and often expensive funds some of which take 2.3% of the pension savings every year. The average cost of new funds is little more than 0.5% a year. The OFT is so worried it has called for an assessment, an audit, a consultation, and a scrutiny. But it does not go as far as capping charges which many would welcome. 

Thousands of higher earners could be fined hundreds of pounds if they don't contact HMRC within the next two weeks. The people at risk earned more than £50,000 in 2012/13 and they, or their partner, got child benefit between 7 January and 5 April 2013. Unless they are already registered for self-assessment they must do so by 5 October. About 350,000 have to register as a result of the Child Benefit High Income Charge which will tax back some or all of the child benefit. The Chief Executive of HMRC will explain the rules.

People who run investment funds that simply track a stock market index like the FTSE 100 have much lower costs than active funds run by a manager and a team of researchers who buy and sell shares in the hope of outperforming the index. But some high cost managed funds are no more than 'closet trackers' which basically invest almost entirely in the big companies in the FTSE 100.So why do some charge as much as actively managed funds?

A charity has told Money Box it has had 60 fraudulent direct debits taken from its account in four years. Last week we revealed how easy it is to set up a direct debit using simply a sort code and bank account number. This week BACS - the system that sets up Direct Debits - explains what it does to check Direct Debits are genuine.

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