Angela Rayner – 2016 Parliamentary Question to the Department for Work and Pensions

The below Parliamentary question was asked by Angela Rayner on 2016-02-05.

To ask the Secretary of State for Work and Pensions, what steps he is taking to ensure cost transparency from pooled retail pension funds.

Justin Tomlinson

It is important that savers know what costs and charges they are paying. As a first step towards achieving this, most occupational pension schemes offering money purchase benefits are now required to report the charges levied on members and, as far as they are able, transaction costs, via an annual Chair’s Statement. The Chair’s Statement, which must be given to beneficiaries and recognised trade unions on request, must also report the trustees’ view on the extent to which these costs present value for members.

Similarly, the Financial Conduct Authority have made rules requiring Independent Governance Committees to report annually on the value for money offered by workplace personal pension schemes, taking into account scheme charges and transaction costs.

The government is committed to ensuring that members of pension schemes are also able to obtain information about all the costs and charges which they bear. Last year, the Government and the FCA jointly carried out a call for evidence on disclosure of transaction costs in pension schemes, and we are currently planning our next steps.

Many pension schemes which invest in pooled funds do so via institutional versions of retail funds, for which costs other than the disclosed investment management fee will be similar. Retail funds will be covered by the Packaged Retail Investment and Insurance Products (PRIIPs) Regulation, which will apply from the end of 2016 and provides for enhanced minimum standards of disclosure.