MPs scoffed at claims made by pensions minister Guy Opperman that the pensions industry should be rated eight out of 10 for transparency.
Speaking today (April 3) at the Work and Pensions committee's fourth and final hearing into pension costs and transparency, Mr Opperman said the industry was trying to enhance people's understanding of pensions and investments and he would give it a transparency rating of eight out of 10.
The committee reacted with surprise at his statement, describing the pensions sector as a "bit of a cowboy area" instead.
The committee is seeking to establish whether the pensions industry is providing enough clarity and transparency around charges, investment strategy and performance, after its 2017 inquiry into pension freedom and choice exposed complicated pension charges faced by savers, schemes and employers.
Giving evidence at the hearing, John Glen, economic secretary for HM Treasury, said he would give the industry seven out of 10 for transparency. "I’m not going to give it a low score. There’s always more things that could be done, but we’re doing reasonably well," he said.
Mr Glen said the industry should lead the implementation of voluntary cost disclosure templates, where asset managers and pension schemes would report costs and charges, rather than regulators or the government.
The Financial Conduct Authority's Institutional Disclosure Working Group, which was set up last year, has already produced five templates, which will cover charges associated with most asset classes, but are not compulsory to use.
Mr Glen said: "The industry is better placed to make sure it works well. This is not an attempt to avoid scrutiny. There is no resistance to having these templates. We just want to make sure it’s done well and gives reasonable, comparable information in a form that trustees can use."
Both Mr Opperman and Mr Glen said they were against making the template compulsory, as called for by trade union Unison last year and as is the case in other countries such as the Netherlands.
They warned this could result in more onerous regulation and push more costs onto the industry.
Mr Opperman said: "The Dutch started these templates on a voluntary basis. We should focus on getting the templates right first, then legislate later if it’s found there is a need to do so."
Mr Opperman added the industry was striving to simplify the documentation given to pension holders, and he believes the solution lies in information being accessed online.
He said: "Traditionally, a pension statement could be 45 pages long. We’re trying to come up with a two-page paper-based statement which explains exactly what is in the pension.
"You also then make it digital, where people can access a separate website where they can get more detailed information about the costs and charges if they so wish."
