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MPs call for pension charges comparison site

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.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. The usual obsession with charges – just because something is cheap doesnt make it better than a more expensive pension and vice versa.

    Comparing insurace products to pension products shows the lack of knowledge or understanding by the people making the decisions about our future!

  2. Matthew Worthington 15th March 2012 at 9:11 am

    “In the insurance industry, comparison websites enable people to compare providers. Our report recommends the pensions industry should establish a similar model.” – I would argue that most pension products are signifiantly more complex than insurance contracts, which tend to be one-and-done contracts. A comparision of up-front charges might just demonstrate a false economy – a low charge is no consolation if the fund achieves low/no growth or a loss. You would really need to show data like fund performance and reduction in yield – a charging comparison alone would not be relevant. If up-front charging was so pivotal, why do we still have personal pensions, Section 32’s, SIPP’s, etc – surely Stakeholder plans would be the only pension product available?

  3. “Auto-enrolment schemes operate around a more or less standard structure”…I assume by that he means NEST, B&CE and NOW pension three provider with three different charging structures!
    We had a fairly “standard charging structure developing in Stakeholder. It was simple and transparent with no smoking mirrors and hidden penalties but RDR will kill that one as well. Charges are important but they should not be driven down to the point where the industry can offer free pensions that are no use to man or beast and no-one understands them because no one can afford to spend the time to advise on them!!

  4. And the next brain wave will be a price of potatoes comparison web-site.
    And how about the cost-of-a-pint-of-beer comparison web site.
    Since politicians went full-time they have lost touch with reality.

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