Industry backs Napf’s new code of conduct
As a nation of under-savers, latest DC code consultation will help “test the practicability of the proposals” with employers, industry says.
A working group of employers, providers, unions and consumer groups is developing an industry-wide code of conduct on the charges made in workplace pensions to help employers choose the best pension for their staff.
The code aims to ensure charges on defined contribution pensions are clearly and accurately stated in writing before an employer picks a pension scheme.
The new code could help employers who are new to pensions to secure the best deal when they start complying with rules to automatically enrol their staff into a pension.
Yesterday (16 May) the group, assembled by the National Association of Pension Funds, launched a public consultation seeking views on the parameters of the Code. Feedback will inform the final code of conduct, to be launched in late summer.
Current regulation requires contract-based defined contribution pension schemes to offer information to members about charges, but the same requirements do not apply at the point employers pick pension schemes for their employees.
The working group includes Accenture, the Association of British Insurers, B&CE, the Confederation of British Industry, the Federation of Small Businesses, Heineken, the Investment Management Association, Legal and General, Napf, National Employment Savings Trust, NOW:Pensions, Trades Union Congress, Which? and Whitbread.
Gina Miller, co-founder of SCM Private and spearhead of the True and Fair campaign, believes transparency on fund fees and transaction costs for UK savers can only be “good news”.
She said: “Our True and Fair campaign, launched in February, has urged the investment and pension fund management industry to give total disclosure on fund charges and transaction costs. Our research shows that UK savers are paying around £18.5bn a year in fund management charges, which is a huge amount of money.
“We believe giving full disclosure on these costs will provide consumers with the ability to make more informed decisions about which saving and pension products best suit their needs. We believe the industry must behave ethically and providing full disclosure on fees and holdings is a matter of urgency.”
Steve Gay, director of life, savings and protection at the Association of British Insurers, added: “We are a nation of under-savers and this must change. We must do more to help people understand the importance of financial planning to secure a decent income in later life. Making pension charges more transparent is a building block in helping customers make the right decisions about their future.
“Employers choosing a pension for the first time need support and guidance to understand the impact of charges on their employees’ pension pots, especially where they don’t have professional advice. A code could help to achieve this. This consultation will help us test the practicability of the proposals with our members and employers.”