THE OFFICE of Fair Trading (OFT) yesterday launched an investigation into workplace pensions amid fears that savers have little control over how their money is administered.
The decision to probe defined contribution schemes comes ahead of an impending influx of savers who have had little direct contact with the pensions industry.
At the moment just four million Britons pay into a defined contribution scheme but the government’s decision to introduce automatic enrolment – which requires employers to pay into a pension scheme for all staff unless they opt out – could see this rise to 13m by 2018.
This has raised fears that inexperienced investors at both company and individual level may not be able to seek out the best return on their investment.
“We want to ensure that providers are competing to offer the best possible deals, and that the choices made by employers mean that employees are saving into good pension schemes for their retirement,” said Mary Starks of the OFT. The investigation will consider whether there is enough competition and enough pressure to keep administration charges low.
This week the government announced a flat £144-a-week state pension for anyone who has made 35 years of National Insurance contributions. It is hoped this simple figure will encourage more people to contribute to a workplace scheme.