In case we were in any doubt about the severity with which the country sees the problems of pension (mis) management, I publish today the Labout party’s latest press release surrounding the OFT’s interim statement (link quoted)
OFT investigation called for by Labour should be a signal to Government to back down and accept our amendments to the Pension Bill – McClymont
Gregg McClymont MP, Labour’s Shadow Pension’s Minister, responding to today’s statement from the OFT on pensions, said:
“The OFT investigation called for by Labour is focusing on the right issues. This should be a signal to the Government to back down and accept Labour’s amendments to the Pension’s Bill. Given the OFT focus on the lack of clarity about what pension schemes charge people – it is shocking that the government opposes Labour’s amendment to the Pension Bill which would have given the government power to require full disclosure of costs and charges.”
“Labour’s proposals would give the government power to prevent rip-offs and ensure everyone could save into a pension scheme they could trust. Without our amendments the Bill is only half a reform.”
- The OFT statement can be found here: http://oft.gov.uk/OFTwork/markets-work/pensions/#named1
The statement highlights the following issues:
- The current level of governance over the performance of some schemes may not be sufficient to ensure that scheme members are getting the best possible investment outcomes.
- A number of schemes have been set up with two-tier charging structures, where those members who have stopped making contributions pay a higher annual management charge percentage.
- There are a number of schemes open for auto-enrolment that appear to have built-in adviser commissions and which may not represent the best value for money for those that could be enrolled into them.
- There may be a number of schemes that do not have a realistic prospect of reaching sufficient scale to generate value for their members.
- The way that different providers currently present their charges may mean that they are not easily comparable.
- There may be some schemes – primarily but not exclusively those sold prior to 2001 – that have charges that may not represent the best value for money, or that may not reflect current standards of scheme design.
- The OFT have outlined the areas on which it is going to focus in a report which is expected to be published in August 2013. The OFT ‘s statement says that it will be focussing on the misalignment of interests between savers and pension providers; excessive costs and charges; and, the lack of economies of scale in pension provision.
- Ed Miliband called for an OFT investigation into workplace pensions at the Labour party conference in September 2012.
- In July 2012 Labour published a policy review document “Pensions People Can Trust” which highlighted costs and charges, governance, scale and the NEST restrictions as areas needing urgent reform to prevent pensions rip-offs. http://www.labour.org.uk/pensions-people-can-trust
A longer explanation of our approach can be found at http://www.fabians.org.uk/publications/pensions-at-work-that-work/