Stop rip-off pen­sion fund charges, MPs tell min­is­ters

Daily Mail - - News - By Lucy White City Cor­re­spon­dent

MIN­IS­TERS are do­ing too lit­tle to stop the pen­sions in­dus­try rip­ping off savers, MPs have warned.

Some firms are mak­ing a ‘fat liv­ing’ be­cause they are not be­ing forced to re­veal all their charges in a sim­ple way, mem­bers of the Com­mons work and pen­sions com­mit­tee said.

They called on the gov­ern­ment to in­crease scru­tiny by forc­ing pen­sion funds to make in­for­ma­tion clearly avail­able to ‘bam­boo­zled’ cus­tomers.

and they ac­cused pen­sions min­is­ter guy op­per­man and Trea­sury eco­nomic sec­re­tary John glen of be­ing com­pla­cent, say­ing no part of the in­dus­try scored above half marks on trans­parency.

independen­t MP Frank Field, who chairs the com­mit­tee, said: ‘rip­ping off pen­sion savers could be elim­i­nated. The se­lect com­mit­tee is call­ing on the gov­ern­ment to shine the search­lights into that part of the fi­nan­cial in­dus­try that has set­tled down to mis­in­form­ing, mis­charg­ing, over­charg­ing and mak­ing a fat liv­ing off the hard-earned sav­ings of pen­sion­ers.

‘gov­ern­ment and reg­u­la­tors should not wait for the in­dus­try to fail to act vol­un­tar­ily as they have so many times in the past. it must put the full force of the law be­hind such changes.’

MPs also crit­i­cised City watch­dog the Fi­nan­cial Con­duct au­thor­ity (FCa), which has only ten of its 3,700 staff work­ing on a ded­i­cated fraud team, af­ter re­ports showed around £2bil­lion was lifted from pen­sion schemes by un­scrupu­lous ad­vis­ers in one year. They said the FCa reg­is­ter of firms that have been banned from giv­ing ad­vice is im­pos­si­ble to un­der­stand and should be made clearer. The com­mit­tee wants to make it eas­ier for savers to see whether they are get­ting value for money in their pen­sion, by forc­ing all schemes to is­sue a doc­u­ment stat­ing the costs and charges.

it found that some pen­sion trustees were mak­ing in­vest­ment de­ci­sions when they did not know the scale of the costs they were in­cur­ring.

as­set man­agers, who in­vest the money for pen­sion schemes, are often un­will­ing to dis­close all the costs charged.

in an ear­lier re­port on the Bri­tish Steel pen­sion scheme, the com­mit­tee found that scheme mem­bers were be­ing ‘shame­lessly bam­boo­zled’ by ad­vis­ers and un­reg­u­lated in­tro­duc­ers. in some cases they were be­ing talked into buy­ing un­suit­able, high-risk prod­ucts with large man­age­ment charges and puni­tive exit fees.

in 2015, the gov­ern­ment capped charges at 0.75 per cent for savers au­to­mat­i­cally en­rolled in defined con­tri­bu­tion schemes. But the com­mit­tee said this does not cover all charges – and urged min­is­ters to re­view its scope.

Pen­sions ex­pert Baroness alt­mann said: ‘Dis­play­ing prices clearly for cus­tomers should be one of the most ba­sic el­e­ments of a prod­uct sale, yet in pen­sions it seems to be an “op­tional ex­tra”.

‘Cur­rently, firms can de­cide how to display and struc­ture their charges. This is like shop­pers go­ing into a su­per­mar­ket and see­ing sim­i­lar-look­ing prod­ucts on the shelves, but the prices are hid­den.’

The FCa said more than 100 of its staff work on pen­sions is­sues, although they are not part of the ded­i­cated fraud team.

‘Shame­lessly bam­boo­zled’

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