The UK government will table an amendment to its own pensions reform legislation forcing providers to provide transparency on charges in defined contribution (DC) pension schemes, amid pressure from party hierarchy.
An amendment to the Pensions Bill 2013, which is entering its final stages of the parliamentary process, before becoming law, will call for the introduction of measures requiring transparency in transaction charges.
The government said this was the latest step in wider plans to ensure savers and consumers received value for money.
It added that the extra information provided, as a result of the amendment, would help those running DC schemes see exactly how much they paid for asset management services.
The amended Bill moves into the report stage, the penultimate formality of parliamentary processes, this week.
It forces the Secretary of State to make regulations that require greater transparency around transaction costs within occupational DC schemes.
Current pensions minister and Liberal Democrat Steve Webb will table the amendment.
In his written ministerial statement, Webb said the increased transparency enacted by the amendment would ensure fairer charges for those entering workplace DC schemes via auto-enrolment.
“We’re taking action to ensure consumers have access to good-quality pension schemes,” Webb added.
“A lack of transparency around the true costs of trading can prevent schemes from securing value for money for their members.”
The move comes after the Conservative and Liberal Democrat coalition came under a scathing attack from former Conservative heavyweight and chancellor Lord Nigel Lawson.
Lawson, who sits in the House of Lords, the UK’s second parliamentary chamber, had called for the government to do more on transparency, suggesting full disclosure was the only way to avoid industry mischief.
The amendment has been made to appease Lawson’s calls and ensure the Pensions Bill, which includes legislation on the new single-tier state pension, passes through Parliament on schedule.
As the cross-party debate over DC scheme charges, specifically within auto-enrolment schemes, intensifies, this is the second amendment to the Bill in as many weeks.
On Thursday, opposition Labour peers tabled an amendment to the Bill, which would force the secretary of state to implement a cap of charges in DC schemes by the end of April 2015.
This was in reaction to the UK government’s postponement of plans to cap charges, which were due to be enforced on providers by April this year.
The opposition reaction to the cap postponement resulted in accusations that the government was avoiding the cap altogether, as it pushed it too close to the next general election.
Reacting to the latest government amendment, opposition and Labour spokesman for pensions, Gregg McClymont, claimed credit for the move, suggesting Webb had given in to Labour pressure.
“The government appears to have finally backed down under Labour pressure on transparency over costs and charges,” McClymont said, “but ministers are only implementing half of Labour’s reform agenda. The government’s headlong retreat on bringing in a pensions cap has left savers at real risk of rip-off charges.”