Policymakers are being urged to “hard-wire” minimum shopping around standards into automatic enrolment pension rules.
In March, the Association of British Insurers introduced its “retirement choices” code of conduct.
The code, which is mandatory for ABI members, is designed to provide savers with clear and consistent information about their options when they reach retirement.
Hargreaves Lansdown head of pensions research Tom McPhail says policymakers must go further by imposing minimum standards on all pension schemes which are used for auto-enrolment.
He says: “The ABI code of conduct is a good start but it does not go far enough. It does not ensure that all defined contribution pension investors will get a good retirement income irrespective of whether they are members of trust or contract-based arrangements.
“The Government has an opportunity to impose minimum standards on all auto-enrolment schemes to ensure that their members get the right shape of income and a competitive rate.
“We should hard-wire the ABI code as a minimum standard for all schemes to help their members find the right shape of income and in addition we should set a minimum number of providers with whom they shop around to ensure they get a competitive rate too.”
Aviva corporate benefits head of policy John Lawson says: “Shopping around for the right income is likely to have a much bigger impact than charges, so this should be something the Government is looking at when it talks about scheme quality.
“The problem with the trust-based world is there are unlikely to be sanctions for schemes that do not have good decumulation processes in place because The Pensions Regulator has a limited budget.
“If you were to legislate it would have to be done for both trust and contract-based schemes, so the most sensible way to do that would be through the FCA’s conduct of business rules.”