Parliament demands fee structure overhaul

Pensions minister Steve Webb and his shadow Gregg McClymont both accused the industry of not doing enough to explain what savers are paying for when they buy pensions.

The debate was called by conservative MP Brandon Lewis, who warned of a “fundamental problem holding back a wider retirement savings culture” caused by confusing product descriptions and fee structures.

Such was the alignment of views between the minister and Shadow minister, Webb quipped there was an “outbreak of violent agreement” in parliament over the idea.

He added: “It is absolutely clear that although people get information, it does not inform.

“If the industry can sort its own house out – it has not done so yet and there is some recognition of that – it is far better than the government trying to be overprescriptive…

“We all want to protect individuals and ensure that, of the money that goes into their pension, far more goes out in the form of pensions. That, I think, is a goal we all share.”

McClymont said: “Even with financial literacy, pensions remain complex…

“What would an enlightened and informed British consumer and voter observe of the UK pensions world? I suggest they would observe that there is a big difference in costs and outcomes between UK defined benefit and defined contribution schemes, even where the sums paid in by employer and employee are comparable.”

The National Association of Pension Funds’ chief executive Joanne Segars was in the public gallery for the debate.

She said: “DC charges can suffer from a lack of transparency and a complexity that leave the man in the street scratching his head. It’s good to see all the political parties talking about this, and finding they have a lot in common.”