The Association of British Insurers wants the power to transfer savers out of legacy, high charging pension schemes without their consent.
An audit of legacy schemes found up to £26bn of assets trapped in plans with charges over 1 per cent. Following the audit, pensions minister Steve Webb said he was “shocked” and would be holding crunch talks with companies to find a solution.
Money Marketing also revealed the cost of delaying moving members from these schemes to more recent pensions within the 0.75 per cent charge cap could cost savers £340m in extra charges in just a year.
In a blog, posted yesterday on the trade body website, ABI long-term savings policy director Yvonne Braun says providers are ready to act to move savers into better value schemes and the Government must “itself show boldness to allow them to do so”.
She says: “Specifically, the Department for Work and Pensions should give providers the power to move members to a new scheme or fund without their consent where it has been verified by the independent governance committee that such a move is in the best interests of scheme members.”
Braun says “reform will not be complete” without Government permission to move members without their consent because the alternative would require individual members to give their approval to the transfer.
She says the new governance committees, which all contract-based pension providers will have to have in place from April, will need to make “tough decisions about what is in the best interests of the majority of scheme members collectively, rather than individually”.
Braun adds providers would also need to be given protection from potential compensation claims from members arguing they were moved to a worse performing fund.