Labour vows to cap pension charges and force annuity broker use
The proposed cap measures are similar to the plans put forward by current pensions minister, Steve Webb, which were criticised for being rushed through the parliamentary process and put on hold last month.
Labour said its measures, thought to be an intital 0.75% maximum charge level to be brought down to 0.5%, would help savers facing a cost-of-living crisis protect the value of their pensions.
Alongside the pension charge cap the party said it would make seeing an annuity broker at the point of retirement a mandatory requirement. It said £1bn a year was being lost by savers who do not get the best deal when they buy an annuity.
That figure came from a joint National Association of Pension Funds and Pensions Policy Institute report out in 2012.
It also said the government’s own figures pointed to people losing £230,000 over their pension saving lifetime through excessive fees and charges.
Shadow secretary of state for work and pensions Rachel Reeves (pictured) said millions of people faced losing thousands of pounds because of “David Cameron’s failure to fix the broken pensions market”.
“A Labour government will ensure independent brokers help people turn their hard-earned private pension pots into a secure retirement income, saving thousands of pounds. We will also make sure that savers income is protected from excessive fees and charges.”
Labour’s pension promises include:
- Referring all retirees to an independent annuity broker to help ensure they get the best deal
- Force pension providers to reveal their full range of charges and transaction costs
- Cap pension charges to clamp down on ‘rip off’ fees and charges
- Bring in “tough new rules” to ensure all pension providers must legally put theinterests of savers first rather than allowing their savings to be siphoned in profits for pension providers and fund managers
- Bringing long-term change in the pension industry to ensure costs continue to fall. This would be achieved by forcing “inefficient providers with high charges to improve or merge”