THE FINANCIAL Conduct Authority (FCA) and the Department for Work and Pensions (DWP) have called on members of the country's investment industry to help fashion new rules on how workplace pension scheme costs should be reported to savers.
From April this year, Independent Governance Committees (IGCs) and pension scheme trustees will be required to report annually on the costs and charges involved in managing and investing the pension pots of scheme members.
“Creating a greater awareness of the true cost of investment is a really important step for savers,” Tom Barton, a pensions partner at law firm Pinsent Masons said.
The move will help trustees and IGCs assess whether a particular strategy could offset the drag on performance due to costs, Barton said.
But watchdogs and campaign groups are concerned that much of the information relayed to scheme providers remains inconsistent and unclear, making it tough for them to assess true value for money.
“Although it is also helpful to have confirmation that neither the FCA nor the PRA (Prudential Regulation Authority) have a policy objective to increase current capital requirements for underwriting life expense risk, providers are still left to contend with a grey area,” Barton said.
The DWP and the FCA want the industry to help shape rules that govern how information about transaction costs should be reported in a standardised, comparable format.
Christopher Woolard, director of strategy and competition at the FCA, said the costs and charges associated with workplace pension schemes directly affect the value of their pension pots.
Pensions minister Steve Webb added: “We have a duty to throw light for the first time on potential hidden charges - and restore faith and fairness in British pensions.”