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MPs to probe workplace pensions

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The Work and Pensions Committee has launched an inquiry into defined contribution workplace pension provision.

The new inquiry follows the committee’s review of auto-enrolment and the National Employment Savings Trust (NEST), which it is due to report on in the coming weeks.

 In a statement, the committee said planned state pension and auto-enrolment reforms will be “significant steps” in improving retirement incomes. However it added “further steps” are needed to bridge the pensions gap.

 The inquiry will explore governance and best practice in workplace pensions. In particular, it will focus on the transparency of charges and costs and the clarity of communication to pension scheme members. It will also look into ways in which scheme members can be supported in making investment decisions and assessing risk, including during annuitisation.

 This comes after the National Association of Pension Funds (NAPF) called for the government to create a national annuity brokerage service if the industry fails to improve the way it supports pensioners during deccumulation.

 The inquiry will examine the management of risk and return in DC schemes, and whether greater economies of scale within DC pension schemes can produce better value for money for members.

 Industry discussions around mastertrusts and the launch of large-scale, low-cost pension schemes such as NOW: Pensions have brought the issue of scale to light before.

 Department for Work and Pensions (DWP) plans to create a system where small pension pots are automatically transferred to follow their owner will also be discussed. The committee has called for submissions to its inquiry by 13 April 2012.

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