Pension firms agree to disclose more details on work schemes

Pensions minister Steve Webb welcomed the decision
Pensions minister Steve Webb welcomed the decision
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MAJOR pension providers have pledged to disclose charges and costs more clearly and consistently to people in workplace pension schemes.

The members of the Association of British Insurers (ABI), including Aviva, Legal & General, Prudential, Standard Life and Zurich, will put the agreement into action in the next 18 months.

The move follows calls for greater transparency over pension charges as workers start to be automatically placed into workplace pensions, to help boost confidence in pension saving.

The UK government’s landmark automatic enrolment programme kicked off last autumn with larger companies, and up to ten million people will eventually be placed in workplace pensions.

The ABI said that the agreement will be put in place by the summer of 2014 for schemes which have been newly set up for auto-enrolment and for all older workplace pension schemes by December 31 2015.

Guidelines for the way in which charges should be disclosed will be developed during the first half of 2013, the ABI said.

Stephen Gay, director of life, savings and protection at the ABI, 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 providers who have committed to the agreement also include Aegon, Axa, B&CE (the People’s Pension), Co-operative Insurance, Friends Life, Lloyds Banking Group, LV=, MetLife and Royal London/Scottish Life.

The disclosure agreement requires that employees are given total charges, at the outset and to a standard definition, including any entry and exit costs.

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.”