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ABI’s Thoreson pledges to improve pension charges disclosure

Otto Thoresen ABI 480

Association of British Insurers director general Otto Thoreson has pledged to make pension costs more clear to consumers following widespread attacks on the lack of transparency among providers.

A report published by the Royal Society of Arts last week criticised insurers for failing to disclose all costs associated with saving in a pension product.

This followed calls from Labour to increase transparency of costs and charges within the pensions industry.

In an interview with BBC Radio 4’s ‘Moneybox’ programme on Saturday, Thoreson (pictured) said: “Our members are regulated by the FSA and there is actually quite a significant amount of disclosure already.

“The problem is that disclosure was developed from a retail environment and actually needs to be looked at to make it easier for people to engage with.

“Trading costs and stamp duty were less important in the past because of the higher levels of charges generally. We should be working at how we can make those more clear to people and allow them to judge between good value and less good value.”

Speaking to Money Marketing, David Pitt-Watson – author of the RSA report – says: “We have a real gap in understanding about pension charges in the UK. We will not get the pensions market to work properly unless people understand clearly what it is they are buying.

“At the moment, the information customers need to make an informed choice is simply not available.

“People find percentages difficult. It is very clear that we could have a bank account-type statement in this country, as they have in Denmark, and it will work for any competitive provider.”

Equity Partners UK managing director Kevin Tooze says: “The industry needs to come clean on all charges that a pension fund incurs. Providers need to forget about percentages and use simple cash examples which people can actually comprehend.”


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There is one comment at the moment, we would love to hear your opinion too.

  1. As someone who spends their life doing charge comparisons between new and old investment plans, including pensions, I can endorse just how difficult it is to get the charging information from the legacy plan providers. I’ve long since lost count of how many times have I been told either that there is ‘no charge’ or ‘no explicit charge’ on with profits!
    Unit linked plans are little better with at least half the charges missed out unless you repeatedly challenge and remind the provider to declare ‘all charges’. UK Life Companies are by far the worst culprits and simply do not have a culture of being explicit about charges – a culture which extends all the way down to the juniors on the so called ‘help’ desks. Modern ‘platforms’ are much clearer but also more expensive. Does everybody need to upgrade from old to new plans to get disclosure?
    The format for annual statements, particularly pensions (which is closely regulated) is a disgrace and designed to obscure much more than it is to inform, particularly when it comes to charges.

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