Pensions: Fees and Charges

(asked on 27th January 2016) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what steps his Department has taken to ensure transparency of commission and other charges, levied by private pension funds on individuals.


Answered by
Justin Tomlinson Portrait
Justin Tomlinson
This question was answered on 4th February 2016

The Department has regularly commissioned surveys on the types and levels of charges faced by savers in defined contribution workplace pension schemes. The latest pension charges survey was published on 17 December 2015 and can be found at:

https://www.gov.uk/government/publications/pension-charges-survey-2015-charges-in-defined-contribution-pension-schemes

It is important that savers know what costs and charges they are paying. As a first step towards achieving this, most occupational pension schemes offering money purchase benefits are now required to report the charges levied on members and, as far as they are able, transaction costs, via an annual Chair’s Statement. The Chair’s Statement, which must be given to beneficiaries and recognised trade unions on request, must also report the trustees’ view on the extent to which these costs present value for members.

Similarly, the Financial Conduct Authority have made rules requiring Independent Governance Committees to report annually on the value for money offered by workplace personal pension schemes, taking into account scheme charges and transaction costs.

The Government is also actively considering how to make the costs of pension schemes more visible to savers, and is committed, in line with the duties of the Pensions Act 2014, to make regulations which require information on transaction costs to be given to members and both costs and charges to be published. To help achieve this, the Department for Work and Pensions and the Financial Conduct Authority published a joint call for evidence last year on disclosure of transaction costs.

In addition, the Chancellor recently announced that the Government will take action to limit early exit fees by introducing a new duty on the Financial Conduct Authority to cap early exit charges in relation to contract-based schemes, and will mirror these requirements in relation to trust-based schemes. This will ensure that individuals do not face financial barriers where they wish to access their pension benefits flexibly.

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