Several major pension providers including Aegon, Legal & General and Standard Life have signed up to a common pension charges disclosure regime.
Members of the Association of British Insurers (ABI) have announced the common disclosure agreement will be implemented in the summer of 2014 for both schemes set up before auto-enrolment and older schemes.
The disclosure agreement requires:
- Disclosure to employees of total charges at outset, to a standard definition, across contract and trust-based workplace pension schemes, including any entry or exit charges
- Disclosure of the total charges taken in the previous year. The intention is that this will be expressed in pounds, either the exact amount or a rounded figure in each case, where reasonably practical
- Disclosure of the previous year’s investment transaction costs (using the IMA's Guidance).
Stephen Gay, ABI director of life savings and protection, said: ‘The agreement demonstrates the industry’s commitment to improving customer understanding in pensions by disclosing all pension charges and costs more clearly and consistently.
‘Automatic enrolment into workplace pensions is bringing millions of people into pension savings for the first time. It is imperative that savers have complete confidence that the industry is open and transparent with them.’
The agreement has been developed in conjunction with a working group including the Financial Services Authority, Investment Management Association, National Association of Pension Funds, The Pensions Regulator and the Department for Work Pensions.
While the initial group of signatories is drawn from the ABI’s membership, consultation will continue on extending this to the broader market of pension provision.
Steve Webb, minister for pensions, said: ‘This is a welcome step in helping customers make decisions about their long-term savings and I hope to see providers across the industry signing up to this agreement.
‘Charges really matter; small differences can have a big impact on a pension pot over time.’