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Pensions minister faces call for universal pension scheme

Pensions minister Guy Opperman has said auto-enrolment and the increased state pension could help minimise the future costs of workplace pension schemes.

In a House of Commons debate yesterday, Opperman was faced with several questions about pension schemes’ fees and charges from Labour MP Kelvin Hopkins.

Hopkins put to Opperman that all private pension schemes – whether defined contribution or defined benefit – incur costs and uncertainties that reduce benefits to savers.

He said: “[Is it not the case] the only way to minimise such costs is to establish a universal full-blown defined contribution and defined benefit state-earnings-related pension scheme for all?”

Opperman pointed to a September 2017 FCA policy statement about transaction costs in workplace pensions and also said providers’ independent governance committees have had rules in force since January over value for money.

He said: “On his discrete point, surely auto-enrolment, with 9.6 million people in this country signed up to it, and the enhanced state pension, which stands at over £1,250 more than in 2010, are the answers to his question.”

Hopkins also asked what recent assessments have been made of trends in fees and charges by asset managers on investments made by DC and DB schemes.

Opperman said: “The government recognises customers need value for money but lowest costs does not always mean best value. By working with the FCA, we believe price transparency for trustees can drive effective competition and allow asset managers that can add value to thrive.”

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