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 week, pensions minister Steve Webb confirmed that 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.
“We intend to table an amendment to the Pensions Bill 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 enable comparison between schemes.
“Our amendment, which is intended for debate at the report stage of the Bill in the House of Lords, 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.”
Investment Management Association director of public policy Jonathan Lipkin says: “Crucially, better disclosure requires both consistency and methodological integrity.
“The IMA has already undertaken significant initiatives on transaction costs but recognises there is more still to do.”
Money Marketing revealed earlier this month that the Government is considering abandoning plans to cap pension charges until after the May 2015 general election because the reform is “too complicated”.
Wingate Financial Planning director Alistair Cunningham says: “The drive for greater transparency is definitely a good thing because people should know what they are paying for when they invest in a pension.
“This information shouldbe made available to savers but if it is all dumped on them at once, most people will not engage.”