The Financial Conduct Authority (FCA) will launch a consultation “in due course” on making mandatory for pension providers to publish costs and charges borne by members.
In a written answer to Parliament, Lord Bates, international development minister, revealed these new rules follow the ones introduced by the Department for Work & Pensions (DWP) for defined contribution (DC) schemes last year.
Under the new proposals, managers and trustees of thousands of workplace schemes will have to publish comprehensive information about their charges, or face a fine up to £50,000.
Trustees of the schemes will not only publish a percentage figure for fees levied on pension savings, but also provide a "pounds and pence" illustration so members can see how charges hit their growing retirement pot.
FTAdviser understands, however, that the FCA hasn’t decided on the date of this consultation.
Last September, the regulator publish new requirements for asset managers, which will have to disclose total transaction costs to pension schemes that directly or indirectly invest in their funds.
While The Pensions Regulator (TPR) is in charge of supervising trust-based schemes – occupational pension schemes and master trusts – the FCA oversees contract-based pensions, where there is no direct contractual relationship between the employer and the product provider.
Common types of contract-based pensions include group personal pensions and group stakeholder pensions.
Steven Cameron, pensions director at Aegon, hopes the new FCA regulations on costs and charges “will mirror DWP rules, as any differences add to implementation costs and could confuse consumers who could well have benefits in both types of scheme”.
He said: “There is still a challenge in making sure fund level transaction costs, which differ in nature from other pre-set charges, are communicated in a way that helps customers take meaning from them.
“A knee jerk reaction to seek out lowest transaction costs would be a bad outcome."
Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, said: "I’m a big fan of transparency, but in my experience consumers are more concerned with how well their pension is performing and would opt for higher charges if it meant higher growth net of charges.
"Performance tables would generally be of more interest to consumers, although any data needs to be taken into context and not looked at in isolation."
In its retirement outcomes review, published last week (28 June), the FCA found that charges in drawdown vary from 0.4 to 1.6 per cent between providers, and are, on average, higher than in accumulation (where in some cases they are capped at 0.75 per cent).
“Drawdown charges can be complex, opaque and hard to compare. Products can have as many as 44 charges linked to them,” the watchdog stressed.
maria.espadinha@ft.com
