Labour has urged the Office of Fair Trading to investigate the pensions industry as part of its campaign to increase transparency of costs and charges.
Providers have come under pressure from pension experts and politicians over the impact high charges will have on peoples’ retirement savings ahead of automatic enrolment.
The Association of British Insurers has argued that new auto-enrolment schemes have an average annual charge of 0.52 per cent. However, the Pensions Institute says some schemes set up in the 1990s charge up to 3 per cent a year.
Addressing the National Association of Pension Funds conference in Liverpool today, Labour Shadow pensions minister Gregg McClymont (pictured) said: “We are calling for all costs and charges to be made clear to employers, savers and trustees. Costs and charges should ultimately be disclosed as a single pounds and pence figure.
“Labour would act to cap charges on pre-stakeholder pensions at 1 per cent. Labour wants the Office of Fair Trading to investigate the pensions market and we think this will inevitably result in the full disclosure of costs and charges.”
McClymont’s comments follow a report published by the Pensions Institute last week warning that a lack of access to financial advice could see small employers stick with old, high-charge schemes for auto-enrolment rather than switching to a low-charge scheme such as Nest.
The report calls for a 0.5 per cent price cap for group pension schemes.