UK – A new industry code for pension charges has received a cautious welcome from the UK government, with pensions minister Steve Webb saying it would serve as "a useful starting point" in improving fee transparency.
The joint code – which has been endorsed by the National Association of Pension Funds (NAPF), its insurance and investment management counterparts ABI and IMA and the Society of Pension Consultants (SPC) – calls for all charges to be stated "clearly and accurately" in writing and for employers to be given examples of how different fee structures affect employer pension pots.
The Pensions Regulator's chief executive Bill Galvin noted that the code came nearly 18 months after it called on the industry to improve transparency.
"We hope and expect that the code will be enthusiastically adopted by providers and the industry," he said.
The code will come into effect in two stages from next year.
At first, it should be applied as a source of best practice. Then, from the beginning of April, providers should adopt a standardised approach to fee reporting.
NAPF chief executive Joanne Segars said the code would "put a spotlight on the fine print" of charges, a sentiment echoed by ABI director of life, savings and protection Steve Gay.
"Pension charges have reduced dramatically in recent years, but we need to ensure information is freely available to employers in a format that is concise and meaningful, and helps them to make the right decisions," he said.
Roger Mattingly, president of the SPC, said employers' decisions should be "driven by value, not just cost".
But he warned against cost being the sole concern.
"A 'race to the bottom' on charges would be fraught with danger for members," he said. "This needs to be kept firmly in view when the code comes into operation."
However, the code only received a cautious endorsement from government.
Pensions minister Steve Webb said it would be "a useful starting point" as auto-enrolment was introduced.
He added: "We are looking to the whole of the industry to do the right thing and work together on this and other industry initiatives to improve transparency."
However, he warned that he was prepared to take action on charges "if insufficient progress" were made.
Labour shadow pensions minister Gregg McClymont was similarly cautious in welcoming the industry initiative, saying there was still much work to be done in reforming occupational pension funds.
"The revised code represents a significant step forward, albeit with room for further improvement," he said.
Morten Nilsson, chief executive of Now: Pensions, welcomed the code, saying that "clear, comprehensive and comparable" information on fees would allow employers to make an informed decision when selecting a pension provider.
"Having clarified costs," he added, "the next important issue is whether the investment solution and risk management is appropriate and can deliver decent returns."