The work and pensions select committee is calling on the Financial Conduct Authority or The Pensions Regulator to launch an urgent review of high pension charges.
In a report on improving governance and best practice in workplace pensions, published last week, MPs also called for a Government review of all pension charges every six months.
The report states: “We recommend the regulator carries out an urgent review of the ‘outliers’ with high charges, with a view to taking action if it considers this necessary.
“We further recommend that the Government carefully monitors the level of pension scheme charges more generally and reviews its position on capping charges in auto-enrolment schemes frequently, at least bi-annually, commencing in 2014.”
The WPSC welcomes a trend towards lower costs across defined contribution schemes but questions the Government’s policy not to cap pension charges.
The Government fears it would cause a “levelling up” of costs around any cap but the WPSC says it is “very concerned” about firms persisting with high charges and the potential for it to reduce retirement incomes.
Affluent Financial Planning managing director Carl Melvin says: “There is definitely scope to investigate outlier charges and determine whether there is consumer detriment or people are being ripped off. There is anecdotal evidence this is the case such as money going into Sipps and then being moved to Ucis with high charges.
“However, just because something is more expensive does not mean it is a rip-off so the regulator should look at value and not just cost.”