The Government has, in a welcome move, accepted both these recommendations, saying it “accepts the WPSC’s analysis of the effect of flat fee charging structures on small pots, especially dormant pots, and as part of the review will give particular consideration to whether restrictions to the use of this charge structure in some circumstances is necessary to protect pension scheme members”
However, in response to a series of recommendations aimed at making information about consumers’ own pension pots and pension products more transparent and readily available, the Government appears inexplicably resistant, including on the issue of including state pension contributions in the upcoming pensions dashboard.
The Committee has long argued that one strong answer to two of the deepest problems currently facing retirement planning in the UK – low levels of saving and engagement; and the failures of regulation that leave pension pots exposed to scammers or opaque, punitive charging structures – is simply better provision of information.
Whether that is making it mandatory that the full extent eventual charges, fees, exit penalties of a pension product are signed up to on the face of the product contract, or making all of the information about a person’s public and private pension contributions and schemes available in one place – a single, national, public pensions dashboard – the Committee regards scope for improving national retirement outcomes simply by empowerment through information to be enormous.
This makes the Government’s rejection of the core recommendation that “by the end of 2019 the Government publish a timetable for the rollout of a non-commercial pensions dashboard”: a Government-led, all-in-one-place pension “account”, that individuals can use to check and forecast their retirement savings and planning, and genuinely compare pensions products, extremely disappointing. The State Pension is a vital part of many people’s retirement plans. The Government is mandating that the industry has pensions data ready for the launch of the pensions dashboards, but does not commit to preparing its own data in time – even though personal State Pension projections are already available through Gov.uk.
Rt Hon Frank Field MP, Chair of the Committee, said: “Why does the Government insist on missing a trick like this? We clearly need a central, national, pensions ‘account’, that every individual could access not only to monitor directly how their own retirement savings and planning is shaping up, but also genuinely compare all the vying “offers” to manage their savings. This requires that the dashboard has details of the size of the state retirement pensions.”
The Financial Conduct Authority’s response, in turn, declined the Committee’s call again to cap charges at 0.75% on its new default investment pathways, but left open the option if charges are not below 0.75% when the policy is reviewed after a year of operation.
The Committee’s Report argued that “The FCA would send a simpler message to the industry if it just set a charge cap now for investment pathways, rather than issuing vague threats to the industry.”
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