Political pressure grows on pension charges

A Parliamentary motion calling on the Government to take urgent action to drive down pension fees has been signed by 48 MPs.

The Early Day Motion, tabled last week, says the MPs are concerned that charges are not understood by consumers and could be costing them up to £67.2bn a year. It says most of that amount goes toward the wages and bonuses of traders and fund managers.

It says: “This House believes that without reform pension funds management business opportunities for the UK financial services industry could be lost; and calls on the Government to take urgent action to drive pension charges down and help the next generation of pensioners and the communities they live in to have a safer, more secure future.”

The EDM says it believes costs are continuing to rise, even though they are already higher than those charges to invest in French, German and American funds.

Yesterday, Labour leader Ed Miliband aligned himself with pensions minister Steve Webb in calling for a reduction in pension charges and threatened to push for them to be capped if this does not happen. Labour MPs make up for 42 of the 48 MPs signed up to the motion.

The National Association of Pension Funds is currently running a review of pension charges to look at ways of making them more transparent.