The workplace pensions industry has bowed to political pressure and published a code of conduct relating to the disclosure of schemes’ fees and investment costs, which will come into force next year.
The voluntary code, which was launched today, is intended to ensure that such disclosure is consistent in an attempt to make it easier for employers to compare different offerings and select suitable ones for their staff.
While such activity can be tricky today, the government is keen to try and ensure that the estimated 11 million workers who are due to be automatically enrolled into workplace schemes over the next five years get a good deal.
But Jonathan Lipkin, associate director of pensions and research at the Investment Management Association, a trade body for the asset management industry that endorsed the code, warned that more work was still required.
“This code provides a template that will apply across the pensions market, and we welcome the progress made over the past 12 months. But this is the beginning of the road,” he said.
Much more had to be done to ensure that defined contribution scheme members had more confidence in such offerings, which meant putting the “emphasis on overall governance as much as disclosure”. “We look forward to working with regulators and other stakeholders in taking this forward,” Lipkin said.
The new code specifies that all charges must be clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges levied by the fund over the last three years along with corresponding services.
Examples of how different levels of charges and charging structures could affect employee pension pots must also be made available via either a paper or online document.
But according to the Financial Times, a single overall comparison figure is not being provided at the moment and stock lending fees and interest on cash balances do not have to be disclosed either.
The code was developed over a 12-month period by a working group of pension providers, trade, consumer and industry organisations. It has been endorsed by the Association of British Insurers, the National Association of Pension Funds and the Society of Pension Consultants and will come into effect from next April.
