Industry launches petition for pension cost transparency

Industry launches petition for pension cost transparency

Pension advisers, providers and senior officials from trade bodies have started a campaign to ask the Work and Pensions Committee to investigate unfair and unclear investment charges. 

A petition to Frank Field MP, chairman of the Work and Pensions Committee (WPC), has been created, which calls on the committee to investigate the current lack of transparency on costs and charges on investment and pensions products.

Andy Agathangelou, founding chairman of the Transparency Task Force, which is behind the campaign, said: "I can think of nothing better for the cause for greater transparency than to have the WPC look into the matter. In my opinion, it is excellent and very pro-consumer."

The letter accompanying the petition said: "It is vital that we have transparent, consistent and straightforward costs disclosure."

It claimed opacity and obfuscation on pension and investment costs would lead to decision makers, advisers and consumers being unable to exercise proper informed choice.

This could also lead to the risk of future litigation, if consumers argue they have not been treated fairly as a result of unclear charges. 

The letter also said: "A lack of transparency leads to poor consumer outcomes. If costs are 2 per cent a year and gross market returns are 5 per cent a year, a 20-year-old saving £100 a month until 65 will lose 42.55 per cent of his or her pension fund to costs."

Mr Agathangelou added: "We believe that savers should not only know what their savings cost, they should also know where and how their money is invested.

"Greater transparency in equity holdings and the stewardship around those holdings is needed. On the basis that it is hard even for MPs to establish where and how their own Parliamentary Contribution Pension Fund is being invested, it follows that the public as a whole may be similarly challenged."

Signatories to the petition include Henry Tapper, founder of the Pension Playpen, who said: "I was one of the founders of the Transparency Task Force and believe in transparency.

"The key things for me are that, in workplace pensions, people do not know what they are buying and what they are paying for their pension. 

"Independent Governance Committees (IGCs) are being set up to help people get a better deal on their pensions and helping people get better value for money.

"However, the IGCs are saying they cannot tell whether people are getting value for money, as they haven't got the data on how much is being charged.

"So much of the cost is bundled into the price we pay for the pensions and it is not explicit. We need to have confidence in our pensions, what we are paying for them, and for the IGCs to be able to tell us what we are paying for them and whether it is value for money.