The Government is to force fund managers to provide a full breakdown of all charges related to defined contribution workplace pensions.
In a written ministerial statement published this morning, pensions minister Steve Webb confirmed the Government will introduce new measures requiring transaction charges in pension schemes to be disclosed.
Webb said: “I am pleased to announce the Government will be introducing new measures to require transparency for transaction charges in pension schemes. Later today we intend to table an amendment to the Pensions Bill 2013 to introduce this latest step in the Government’s wider plans to ensure consumers receive value for money from their pension savings.
“Transparency of costs and charges is fundamental for good scheme governance and to enabling comparison between schemes.
“Our amendment, which is intended for debate at the report stage of the Pensions Bill 2013 in the House of Lords this Wednesday, will place a duty on the Secretary of State to make regulations requiring greater transparency around the transaction costs incurred by work-based defined contribution schemes.”
Money Marketing revealed earlier this month the Government is considering abandoning plans to cap pension charges until after the May 2015 general election because the reform is “too complicated”.
It is understood the Treasury and the Department for Work and Pensions have clashed over the plans, partly due to disagreement about whether transaction costs should be included in the cap.
On the charge cap, Webb said: “Last year, we consulted on whether to cap charges in the default funds of schemes used for automatic enrolment, and the Government remains committed to seeing this policy through during the life of this Parliament.
“Accordingly, our response to the consultation on charges, and further proposals on quality and transparency in workplace pension schemes, will be published soon.”
Labour shadow pensions minister Gregg McClymont says: “The Government appears to have finally backed down under Labour pressure on transparency over costs and charges, but ministers are only implementing half of Labour’s reform agenda.
“Ministers are failing to allow savers and employers to get the greatest benefit from the new workplace pensions and the Government’s headlong retreat on bringing in a pensions cap has left savers at real risk of rip-off charges.”