Investment: Fees and Charges

(asked on 19th July 2017) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, whether he has identified the cost collection templates negotiated with the Investment Association as his Department's preferred methodology for cost collection.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 6th September 2017

It is important that pension savers know the costs and charges they are paying and the government is committed to making this happen. We want pension scheme members to have confidence that there are no hidden charges or fees being taken from their pots.

Since 2015, we have required occupational and personal workplace pension schemes offering money purchase benefits, including master trust schemes, to produce an annual statement, which is available to members; which sets out the level of charges and, as far as they are able, transaction costs applicable to all funds; and the extent to which these charges and costs represent good value for members.

It has previously been difficult for schemes to obtain information about the charges and transaction costs they incur. The Financial Conduct Authority (FCA) consulted last year on proposals requiring asset managers to disclose this information to trustees of occupational schemes offering money purchase benefits, and the governance committees for workplace personal pensions.

The FCA will publish a Policy Statement later in the year setting out the final rules and guidance to disclose costs in a standardised format. We then intend to consult on how we can provide information about these costs and charges to the members of occupational schemes and to publish it. The FCA will, thereafter, introduce similar provisions for personal workplace pension schemes members.

The FCA’s Asset Management Market Study indicated that there are significant issues with the way the investment market works. Savers, trustees, and scheme sponsors need a transparent, competitive and cost-effective investment market to provide for their security in later life and to keep their pension provision affordable. We will be studying the recommendations and proposed remedies closely to see what else government can do to support the FCA’s vital work in this area, which could deliver favourable outcomes for pension savers.

To drive competitive pressure on asset managers the FCA recommended we look at barriers to scheme consolidation. We know that smaller pension schemes may not be able to negotiate or drive lower prices within this market, which in turn can lead to better outcomes for savers. Following a recent Call for Evidence, we are actively considering ways that we can simplify scheme consolidation and enable pension scheme scale to develop further.

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