‘Pensions industry standard needed to focus on charges’

The chairman of the work and pensions select committee said self-regulation would never lead to full disclosure of charges while participation in industry codes was voluntary.

Speaking at a Westminster Employment Forum seminar in London on 5 November, Dame Anne called for a “mandatory” industry standard to be imposed on providers and a “full and comprehensive” list of charges revealed for employers and scheme members.

Dame Anne said: “The Office of Fair Trading highlighted its concerns in its report on workplace pension schemes that transparency measures do not go far enough. Little has been done to ensure a comprehensive breakdown of charges has been provided because the industry is producing codes that are essentially voluntary. Self-regulation is not working as well as we would hope.

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“We need a mandatory industry standard so complete transparency is provided on all the costs of schemes – and I mean a full and comprehensive list of third party, market and other charges.”

She said a template “must be there for smaller employers” as they approach staging dates so that they are “ at least used to thinking about schemes”.

Dame Anne also questioned the refusal of pension minister Steve Webb to create a single pension regulator and said that the likely introduction of a charge cap would require a “strong regulator with teeth” to monitor schemes.

She added: “If the government is not willing to restructure the system it is hoped that it will at least make changes to the current system to ensure workplace schemes are vigorously regulated.”

Adviser view

Michael Smith, consultant for London-based IFG Financial Services, questioned why the recent OFT probe into workplace pension schemes did not compare the active member discounts on workplace schemes with the charges being levied on contributions into the National Employment Savings Trust.