From April this year, Independent Governance Committees (IGCs) and pension scheme trustees will be required to report annually on the costs and charges involved in managing and investing the pension pots of scheme members.
The FCA and DWP are seeking views to feed into the next phase of this work, which looks at how information about transaction costs should be reported in a standardised, comparable format.
Christopher Woolard, director of strategy and competition at the FCA said:
“Transaction costs and charges associated with workplace pension schemes have a direct impact on the value of people’s pension pots. “Trustees and IGCs of workplace pension schemes need to have clear and transparent information as part of assessing value for money offered by pension schemes. We want clarity and consistency across the market and that is why we are asking for views on how costs and charges information should be disclosed.
Minister for Pensions Steve Webb said:
"Pension savers need to have confidence that their hard-earned money is working for them. "That is why it’s so important we understand all the charges that are placed directly and indirectly on pensions - and that pension schemes and trustees can present them to members in a clear and transparent way.
"There is a fear that the dark corners of the investment and pensions industry hold some nasty surprises. We have a duty to throw light for the first time on potential hidden charges - and restore faith and fairness in British pensions."
The joint call for evidence between the FCA and DWP is asking for evidence on:
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what costs should be included in the transaction cost reporting;
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how such costs should be captured and reported;
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whether information about other factors that impact on investment return should also be provided;
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how IGCs and trustees will receive costs information and whether additional disclosure requirements on other parties are necessary to enable this; and
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when, how and in what format members and/or other prescribed persons should receive transaction cost information.
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