Pension bosses must disclose costs

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Pension fund managers will be forced to come clean about hidden costs which can wipe tens of thousands off the value of retirement savings pots under plans being set out by the Government.

Ministers will announce that fund managers of defined contribution workplace schemes must in future disclose full details of all their costs to the public, The Times reported.


The Office of Fair Trading (OFT) warned last year that there was "insufficient visibility and comparability of charges" to ensure that competition in the market was fully effective.

A Department for Work and Pensions spokesman said: "We're taking action to ensure consumers have access to good quality pension schemes so they have the confidence to plan for their futures.

"A lack of transparency around the true cost of schemes can prevent savers from having value for money. We will outline our proposals to tackle this issue shortly."

The Times reported that the announcement on disclosure of charges had been brought forward to avoid a damaging Lords revolt led by former chancellor Lord Lawson.

Speaking during debate on the Pensions Bill last month Lord Lawson said: "In a competitive market, compulsory disclosure will go a very long way towards removing the mischief."

Pensions Minister Steve Webb has already promised a "full frontal assault" on pension scheme charges, with the Government consulting on a cap of around 0.75% a year.

Small variations in charges can make huge differences over time to the eventual size of the pension pot that someone ends up with.

The Government said that someone who saves £100 a month over a typical working lifetime of 46 years could lose almost £170,000 from their pension pot with a 1% charge and over £230,000 with a 1.5% charge.