Fourteen of the UK’s biggest pension providers have signed up to a series of charges disclosure standards set out by the Association of British Insurers.
Under the terms of the agreement, insurers will be required to:
disclose total charges to employees at the outset, to a standard definition, across contract and trust-based workplace schemes, including entry or exit charges;
disclose total charges in the previous year, expressed in pounds;
disclose the previous year’s investment transaction costs.
The agreement will be implemented by the Summer of 2014 for schemes newly established for auto-enrolment, and for all older workplace pension schemes by 31 December 2015.
A common definition of all charges to be disclosed at the outset to pension scheme members will be developed in the first half of this year.
Aegon, Aviva, Axa, B&CE, Co-operative Insurance, Friends Life, Legal & General, Lloyds Banking Group, LV=, MetLife, Prudential, Royal London/Scottish Life, Standard Life and Zurich have signed up to the disclosure standards.
ABI director of life, savings and protection Stephen Gay says: “This agreement is a vital way of providing savers with greater understanding and confidence in the value of saving for their financial needs in later life.
“The agreement demonstrates the industry’s commitment to improving customer understanding in pensions by disclosing all pension charges and costs more clearly and consistently.
“Automatic enrolment into workplace pensions is bringing millions of people into pension savings for the first time. It is imperative that savers have complete confidence that the industry is open and transparent with them.”
Pensions minister Steve Webb (pictured) says: “This is a welcome step in helping customers make decisions about their long-term savings and I hope to see providers across the industry signing up to this agreement.
“Charges really matter – small differences can have a big impact on a pension pot over time.
“Automatic enrolment makes it all the more important that people have access to schemes which offer both transparent and value for money charges. The industry must be ambitious in its timescales for achieving greater transparency.”