A joint industry code of conduct for disclosing information to employers on the charges made on workplace pensions has been published today by a group of pension’s experts.
It is endorsed by the National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), in association with the Investment Management Association (IMA) and the Society of Pension Consultants (SPC).
As part of automatic enrolment many employers are required to set up a workplace pension scheme for the first time. Under the new code, providers and advisers will be required to tell companies how their staff will be affected by charges taken out of individual pension pots.
The code stipulates that all charges are clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges imposed and the corresponding services.
It also says that employers must be able to see examples of how different levels of charges and charging structures could affect the pension pots of their employees, either through a document or a dedicated web tool.
The new code would apply to all parties providing services to employers in setting up and administering pension schemes for auto-enrolment, including insurance companies, trust-based pension schemes, financial advisers, and any other professionals offering paid advice.
Joanne Segars, Chief Executive of the NAPF, said:
“Employers need to be able to see more clearly what is being charged and why. They will then be more likely to pick the best pension for their staff. The code sets out a template for explaining charges that will make it easier to compare the cost of pension A with pension B.”
The TUC has welcomed the new code, and it’s General Secretary Brendan Barber, said:
‘”The code is a big step forward. Employers need help in choosing the best auto-enrolment pension, and their staff need to know they have made a good choice too.
“This new code brings greater transparency to charges. This is vital as even small variations can make a big difference to the pensions people receive.
“It’s good to see consumers, unions, employers and the pensions industry working together on this code. This co-operation must continue to ensure compliance with the code.
“And whilst the charges code will be of great help we still need to develop more ways to ensure that both employers and employees get the best possible return from each pound saved.”
It has been suggested that the code will come into effect in two stages. The first stage beginning on 1 January 2013 when the code should be used as a guide for best practice, and the second stage starting one month after the launch of the dedicated web tool, which is expected to be available from 1 April 2013.
