MPs are pressing the pensions industry to make it easier for people to compare products by introducing a comparison website.
A report from the work and pensions select committee says it is too difficult for people to compare fees and charges applied by providers. The committee says the industry should develop a “clear, accessible and universally adopted” charging structure by the end of 2012.
Committee chair and Labour MP Ann Begg says: “In the insurance industry, comparison websites enable people to compare providers. Our report recommends the pensions industry should establish a similar model.”
Speaking to Money Marketing committee member and Conservative MP Brandon Lewis (pictured) says this will be possible for auto-enrolment schemes but more difficult for the wider industry. He says: “Auto-enrolment schemes operate around a more or less standard structure, but in pensions more widely there are so many variables that it will be difficult to compare.”
The report adds that if any hidden charges remain in auto-enrolment products at the start of 2013, the Government should take action.
Begg says: “Pension providers must be able to demonstrate clearly and transparently that they are offering value for money for employees who are automatically enrolled.”
Last year, the Government announced plans for a flat-rate pension, but after no further announcements for months Labour has suggested the plan may have been sunk. The report says it is necessary to have this in place before auto-enrolment begins in October.
It says: “The Government must act swiftly to establish a simpler, flat-rate state pension. This will enable people to increase their workplace pension saving with confidence that they will not be penalised by losing state benefits in retirement.”