The head of policy for pensions provider B&CE criticised the government’s recent consultation on the capping of defined contribution charges for workplace pensions and said providers should not compete on how much they charge but on quality of the products they offer.
Mr Philp said: “While we welcome this consultation and the potential for government action to drive value for money for pension savers, we are concerned that the government has missed a trick with its approach.
“Instead of picking up the gauntlet thrown down by the recent Office of Fair Trading report to improve transparency and comparability across pensions, the government’s accommodating approach and lack of detail means that it is a consultation built on sand.”
He said one particular concern about unintended consequences arising from the government’s approach was that by reinforcing dual pricing models as a legitimate way to charge for pensions, the rest of the industry might follow suit.
Mr Philp warned that giving this official stamp of approval could lead to more complexity, not less.
He added: “A primary focus for providers should be to ensure that savers get an excellent product that is delivered at a low price. Any charge cap needs to apply consistently and fairly across different ways of charging for pensions. Not to do so would be anti-competitive and unfair on the consumer.”
Patrick Connolly, head of communications for Somerset-based Chase de Vere, said: “We agree that too many company pension schemes, particularly older schemes, offer poor value to employees and steps need to be taken to address this.
“However price isn’t the only consideration so the best way for employers to ensure they get good value for themselves and their employees is to take independent financial advice.