Talking Head: Pensions minister Ros Altmann requests the pensions industry's help to transition away from schemes with member-borne charges.
We are committed to looking after pensioners – however, government cannot fulfil this commitment alone. I want to use this column to talk about one of the areas of support we need from the pensions industry.
One of my priorities is ensuring employers set up good pension schemes for their staff and encouraging people to save into a workplace pension. But it is also important to protect the money that is invested and ensure savers get a fair deal.
We are introducing auto-enrolment measures to ensure more people are saving into workplace pensions, but it is then up to pension providers to look after their customers well, so employees will want to stay enrolled and ultimately save more than the statutory minimum.
As some readers will be aware, in its report on the workplace pension market the Office of Fair Trading recommended that schemes with in-built commission should not be used for auto-enrolment. This was because the OFT was concerned members could pay commission without realising and that commission could present a barrier to switching to better-value pension schemes.
For me, the move is a natural next step following the charge cap on default funds that was brought in from April
This is why I was pleased to recently announce a consultation on options to ban member-borne commission charges in occupational pension schemes used for auto-enrolment.
For me, the move is a natural next step following the charge cap on default funds that was brought in from April.
If members are paying a charge, they must understand what they are paying and what the money is for. If it merely represents value to the employer or other people, then those who benefit should pay the charges directly.
As part of our consultation we are seeking views from the pensions industry and interested members of the public on the most effective way of delivering this reform.
I would encourage as many people as possible to respond, to ensure we can make the transition in a way that balances the needs of consumers and the industry.
We are in the midst of the biggest reforms to the pensions system for decades, which offer new opportunities for the industry. I hope we see the continued development of good-value products and services that consumers deserve.
Ros Altmann is the pensions minister
