The Association of British Insurers (ABI) has set out plans for clearer pension charges in a letter to the Pensions Regulator and the Financial Services Authority (FSA). In it, the ABI has called for consistent and simple disclosure of charges to employees in contract and trust-based pensions, which should include transaction costs.
The move is aimed at defined contribution (DC) pension schemes ahead of the introduction of autoenrolment. ABI director general, Otto Thoresen, commented: “For too long, different parts of the private pension system, regulated by two different regulators have given employees too little information about what they are paying. Openness and transparency are now expected by customers, so we all have to do better”.
The National Association of Pensions Funds welcomed the new approach, and director of policy, Darren Philp, said: “Fears about charges are putting people off pensions, and the industry must address that by being more upfront about its fees. Communication needs to become simpler and more transparent across the pensions landscape. We have been concerned about charges for a long time, which is why last year we kick-started work on an industry code to give better information to employers. When autoenrolment starts, that code will help businesses pick the right pension for their staff.”
The fund management trade body, the Investment Management Association also welcomed the initiative saying: “With automatic enrolment looming, the pensions industry has both the opportunity and the responsibility to improve disclosure. As part of this, asset managers are already in a position to provide consistent information about the products for which they are responsible. Collectively, we should work to ensure all information for pension savers is meaningful, transparent and consistent.”