"Indexed funds track an index of shares so fund managers have no control over the performance"
This single statement is the most devastating demolition of the pensions racket I have yet encountered. Well done. I agree wholeheartedly. So why, if they haven't any control over the performance of these funds, do they charge fees for doing what a monkey sticking a pin into the financial times could do just as well? (In fact a monkey would have done better than the geniuses who lost more than 30% of my pension during a period the market as a whole dropped only 25%!)
Incidentally, I don't agree with your assumption that the mugs who have already been burned by under-performing pensions are legally liable for this levy. I believe that if the matter goes to the courts the determining factor will be the de-facto ownership and control of the fund to be levied.
As one of the aforesaid mugs who paid 3-4% up front, plus 1% per annum to the Likes of Irish Life for the honour of losing my money I fail to see how Irish Life would be unable to absorb this 0.6%. Unfortunately, what pensions industry people like you fail to understand is that most of us small-time pension consumers have pensions with people like Irish Life. By the way, I haven't a clue what an AMC is. Nor, as a consumer, should I have to care. To illustrate my point: I selected Irish Life's cash fund because I thought my money would be kept in cash and my capital would be secure. After they took 3.5% off the top I discovered that "cash" isn't cash at all, but something called "cash-backed", and that the geniuses in Irish Life have managed to get a return of 0.6% on my money, and I have been advised that I have no hope of getting back to par by my chosen retirement date. Another jolly little practice of this industry is to state projected earnings which bear no relation to what analogous funds have actually earned in recent years. The literature with my "cash" fund posited year on year returns of 6%. In fact, I have learned that analogous funds managed by Irish Life have earned about 2% in the recent past. Why is this allowed by the regulatory authorities?
My only consolation is that there is now a stampede away from endowment pensions. This failed industry, which cannot see past its own self-interest, would like to blame the stampede on tax-relief and the levy. That is only part of the reason. Bad value, lack of transparancy, unsuitability to modern work and life patterns, and lack of trust in an industry that seems to use words like cash to mean something entirely different to what ordinary folk understand, are more significant reasons.
We now need root and branch reform of the industry. Ordinary people need to be able to put their pensions into simple dirt-exempt, fee-exempt, interest-bearing savings accounts with the same tax benefits as pensions-industry products, but without the risks, lack of transparancy, and unreliability. Sure, they would have to accept modest returns and the risk of inflationary losses. However, inflation erodes all products - but not as surely as fees and charges - and the depradations of the hapless fund-managers who haven't managed to outperform deposit returns in a decade.
One great benefit of having this alternative would be to introduce proper choice and competition into the sector, and force the industry to justify its fees and charges. On the evidence of the last decade, it can't.