Govt to force full disclosure on pension charges
Ministers have announced that fund managers of defined contribution workplace pension schemes will be made to disclose their full costs to the public.
The move comes after the Office of Fair Trading investigated the market and concluded there was “insufficient visibility and comparability of charges” to ensure proper competition.
A Department for Work and Pensions spokesman said: “We’re taking action to ensure consumers have access to good quality pension schemes so they have the confidence to plan for their futures.
“A lack of transparency around the true cost of schemes can prevent savers from having value for money. We will outline our proposals to tackle this issue shortly.”
The Times said the announcement had been brought forward to avoid a “damaging Lords revolt” spearheaded by former Chancellor Lord Lawson.
Pensions minister Steve Webb is already committed to tackling pension scheme charges and the Department for Work and Pensions is currently consulting on implementing a cap. However, the plans were recently delayed by 12 months after questions over the consultation process.
Pension charges can significantly eat into savings over time. The government said someone who saves £100 a month over a typical working life of 46 years can lose about £170,000 from their pot through a 1% charge and move than £230,000 via a 1.5% charge, according to the Telegraph.