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Labour calls for OFT to investigate pensions industry

Gregg McClymont 480

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.

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Comments

There are 18 comments at the moment, we would love to hear your opinion too.

  1. Has somebody forgotten to include the 1.8% charge on contributions in to NEST? or please enlighten us all on how you came up with the figure of 0.52% charge. Clear & Transaparent come to mind…..Thank you

  2. What a numpty!!! He wants all costs expressed as a single pounds and pence figure – capped at 1%!! Obviously hasn’t a clue, and been taking lessons from Ed Moribund!

  3. Nicholas Pleasure 18th October 2012 at 2:57 pm

    Maybe you should call for the NAO to investigate the regulatory industry first. Perhaps this would allow you swivel eyed slack jawed politicians to understand where the majority of the costs come from.

    A £0.5bn annual budget doesn’t just materialise – real people have to pay for it.

  4. Incompetent Regulators Award Team 18th October 2012 at 3:01 pm

    That’s ironic……………………..

    This should lead back straight to Crash Gordon and Labour itself as the oroginal culprits!

    eeeerrrrrrmmm….short term memory I think.

  5. It would be good to get transparancy on charges.

    Shame they didnt implement this during their 13 in power.

    Wonder why not?

  6. Right… the Answer is “Lower charges” now what was the question again?

    How are we going to persuade people to put more money into a pension?
    a) Have in place a system where they can receive advice and be encouraged and ‘sold’ the idea that saving into a pension is a good idea
    b) Sneakily compulsorily make them join a scheme and make it difficult for them to come out of the scheme if they don’t want to save into a pension and not have them able to receive advice.
    c) Lower charges

    Answers on a postcard to Labour Party headquarters…

  7. PoliticalSaurusRex 18th October 2012 at 3:19 pm

    I’m extinct but I still blame everybody else for the mess I myself created, a great big pile of dino poooh..

  8. Another ‘career’ politician who has never had a job in the real world. Ex High School & Uni (incl Oxford) claiming not to be another ‘Champagne Socialist’ – following Ed’s lead. When people like this & Ed start leading by example then I might start listening. According to the records Gregg voted against Auto Enrolment and strongly against encouraging Occupational Pension schemes!! Just right for Shadow pensions minister then!!

  9. Surely the OFT should be investigating Labour………

  10. A quick view of wiki shows that he would either be a professional academic or be involved in politics without ever actually working.

    So no economics background and has never worked in his life – obviously ably qualified to be in the position he holds then!

  11. Beware of confusing cost and value for money. If I had the choice of low fees with a company with a history of poor investment returns or a 3% fee with someone that was likely to get me an extra 5% growth per annum it might make sense to pay for the extra return.
    You are unlikely to get a Rolls Royce for the cost of a Trabant!!!

  12. Over the years I have met 100,s of clients in various industries, who have had to change the way they operate, becasue of outside influences.(usually government or quangos run by people who have no real idea of each industry at the coalface, but all of them cannot comprehend the amount of interference, from MP,s trying to make a name for themselves, Various “We know it all magazines and TV programmes” the OFT, FSA, FSCS, MAS Final Services Ombudsman, Claims companies, and umpteen other organisations who feel they know it all. of course usually they have never actually run a business, looking at cost and profit.

  13. Another opportunity for me to point out to Labour that Civitas identified that the removal of dividend credit, aka Gordon Brown tax raid on pensions is double taxation and equivalent to a 0.42% pa charge on all pension funds,(public sector not included).

  14. Saint Francis of Assisi 18th October 2012 at 5:59 pm

    Why are they such a wunch of bankers?

  15. We should be grateful to Mr McClotmont for confirming that his party has even less of a clue than the others when it comes to matters financial.
    Sean has put it most succinctly.

    As others have also said – pity he didn’t recall Crash Gordon’s pension vandalism. That was (is) worth a darn sight more than a few basis points on charges.

    Rather apposite that he was speaking from Liverpool. As an ex Mancunian I well know that a Liverpuddlian’s idea of a pension is a collection of hub caps.

  16. I know I will sell gold at the bottom of the market, tax dividends going into pension schemes. I will stop DB schemes being fully funded during the good times.Blame this on the charges.

  17. Saying “some schemes charge 3%” is like saying some people have blue eyes. Its a broad statement, possibly routed in some truth, but who are these pension schemes are the charges as they stated?

    Yes, in the 90’s a lot of unitised plans had initial units, bid offer spreads etc that would push up charges but then they had a lot of back end uplifts such as the recycyling of administration fee that gave their fund a boost, and gave back a lot of the charges incurred.

    My point being that to say 3% is a scaremongering tactic. It has no context.

    To cap charges at 0.5% for, what I assume are pensions being used for AE only?, means that people pushed into these plans will get a handful of passive funds in which to make a real return as no active fund managers can price that low surely?

    McLymont and Milliband and a pair of clowns.

  18. And when Labour had 13 years to deal with these perceived problems they did what?

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