Pensions schemes slammed for opaqueness

A report by the Work and Pensions Select Committee, chaired by Frank Field MP, has called on pension schemes to be forced to publish charges in full, including transaction costs. At present, new rules ushered in last April recommend pension schemes publish this information but disclosing was made voluntary rather than mandatory. In light of this, the Work and Pensions Select Committee is concerned that take-up will not be high and has called for disclosure of all charges to be made mandatory.

The hard-hitting report states that the government and regulators should not wait for the industry to fail to act voluntarily, as they have been done so many times in the past. The report notes: “We fully recognise that value for money is not solely about costs, but costs inevitably form an important part of the equation.

Complexity and layers of intermediaries mean that many trustees do not have access to suitable information to make judgements about the costs of managing their schemes.” In addition, the report called on the Financial Conduct Authority to cap pension charges at 0.75% for its proposed four ready-made investment solutions, so-called investment pathways. At present, there is no charge cap in place.

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