Code on pension charges could help employers spot a better deal | PLSA
Code on pension charges could help employers spot a better deal

Code on pension charges could help employers spot a better deal

16 May 2012

A new Code of Conduct on the charges made on workplace pensions could help employers choose the best pension for their staff, a wide ranging group said today.

The group is developing an industry-wide Code which ensures all charges on ‘defined contribution’ pensions are clearly and accurately stated in writing before an employer picks a pension scheme.

The new Code could help employers who are new to pensions to secure the best deal when they start complying with rules to automatically enrol their staff into a pension.

Today the group, which was formed by the National Association of Pension Funds (NAPF), launched a public consultation seeking views on the parameters of the Code. Feedback will help generate the final Code of Conduct, to be launched in late summer.

There are currently big gaps in regulation and practice which make it difficult for employers to compare charges between pension schemes and to assess value for money.

Joanne Segars, Chief Executive of the NAPF, said:

“We need to boost faith in pensions, but charges are a big concern for many people and often the information on offer is unclear. People need to see what is being charged and why, and in a language they understand. This Code could really flush out the detail on charges by making sure that the fine print gets magnified.

“Auto-enrolment is just around the corner and many businesses will be looking at pensions for the first time. This Code will help employers make the right pension choice for their staff. Greater clarity will make it much more likely people will stick with their new workplace pension if their employer has banked them the best deal possible.”

The working group that launched the consultation is made up of employer representatives, pension industry leaders, union and consumer groups, major employers, and pension providers.

Steve Gay, Director of Life, Savings and Protection at the ABI (Association of British Insurers), said:

“We are a nation of under-savers and this must change. We must do more to help people understand the importance of financial planning to secure a decent income in later life. Making pension charges more transparent is a building block in helping customers make the right decisions about their future.

“Employers choosing a pension for the first time need support and guidance to understand the impact of charges on their employees’ pension pots, especially where they don’t have professional advice. A Code could help to achieve this. This consultation will help us test the practicability of the proposals with our members and employers.”

Jamie Fiveash, Director of Customer Solutions at B&CE, said:

“Charges across pension schemes are horrendously complicated and diverse. There’re no consistent regulations which govern annual management charges (AMCs), which are often quoted as the scheme or sole charge, but can just be the tip of the iceberg in terms of total charges suffered. Schemes having a mixture of percentage AMCs, initial charges and flat rate administration charges means it’s extremely difficult for consumers to make comparisons and understand what they’re being charged. B&CE fully supports the new code that aims to ensure consistency of disclosure and communication, to aid employers with comparison and increase consumer confidence in pensions at this critical time with auto-enrolment on the horizon."

Pierre Williams, spokesman for the FSB (Federation of Small Businesses) said:

“Confidence in private sector pensions has plummeted in recent years despite the growing need for all of us to save more for retirement. A great deal of that loss of confidence stems from the often opaque charges levied on pension holders. Ensuring these charges are not only fair and reasonable but also clearly defined in plain English, is vital to restore lost confidence.”

Jonathan Lipkin, Head of Research and Pensions at the IMA (Investment Management Association) said:

“We’re pleased that the different parts of the pensions industry have come together to discuss how to help employers understand the nature of the scheme choices available, and the associated costs. Charges are of considerable importance, but so too is the nature of what is on offer for any given price. Employers need to feel confident that they have secured the best overall scheme arrangement for their employees. Once finalised, we hope that this Code will facilitate the process.”

Helen Dean, Managing Director, Scheme Development at NEST said:

“NEST welcomes and supports the aims of the consultation into pension charges.

“Pension charges should be transparent and explained in ways that both employers and consumers can understand. It is important to employers that their workers can understand what they’re being charged, why, and the potential impact on their final pot, particularly when these workers are being automatically enrolled.

“It should be easy for consumers, and their employers, to compare the charges of different schemes.”

Morten Nilsson, CEO, NOW: Pensions, said:

"We strongly believe transparency is key to auto-enrolment being a success in the UK. NOW: Pensions has been supporting the NAPF’s work and think the code on pension charges is a good step in the right direction. We have already implemented our charging structure in “pounds and pence” so our members will be able to follow what’s happening with their savings. Hidden charges have conspired to erode pension pots for too long. The difference between our charges and 1.5% over the life of a 40 year pension can make over 30% difference in the final pension pot.”

Brendan Barber, General Secretary of the TUC, said:

“This is an important contribution to opening up the mysterious world of pensions charging. Selling pensions to employers for auto enrolment is about the only unregulated pension sale allowed, and anything that can help employees and employers work out whether they are getting a good deal is a step forward.”

Richard Lloyd, Executive Director of Which?, said:

“All automatic enrolment pension schemes must offer good value for money. It is important that employers can compare like with like and be able to easily identify the best value scheme for their employees.

“Alongside greater transparency, we want clearly defined minimum standards to protect consumers from being automatically enrolled into poor value schemes."

Current regulation requires contract-based defined contribution pension schemes to offer information to members about charges, but the same requirements do not apply at the point employers pick pension schemes for their employees.

The working group members are: Accenture, Association of British Insurers (ABI), B&CE, Confederation of British Industry (CBI), Federation of Small Businesses (FSB), Heineken, Investment Management Association (IMA), Legal and General, National Association of Pension Funds (NAPF), National Employment Savings Trust (NEST), NOW:Pensions, Trades Union Congress (TUC), Which?, Whitbread.


Notes to editors:

1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.

The ABI’s role is to:

- Be the voice of the UK insurance industry, leading debate and speaking up for insurers.

- Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.

- Advocate high standards of customer service within the industry and provide useful information to the public about insurance.

- Promote the benefits of insurance to the government, regulators, policy makers and the public.

3. B&CE, a not-for-profit organisation, has been providing workplace pensions to employers with transient, low to moderate earning workforces, both large and small for the past 30 years. In November 2011 it announced The People's Pension, as its alternative offering for auto‐enrolment. The People's Pension, a multi-employer scheme, from B&CE is a hassle-free, flexible and portable workplace pension designed for people, not profit and is suitable for any organisation, large or small, in any sector.

4. The FSB is the UK's leading business organisation with around 200,000 members. It exists to protect and promote the interests of the UK’s Real-Life Entrepreneurs who run their own business. More information is available at

5. The IMA is the trade body for the UK's £3.9 trillion asset management industry. The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. Our purpose is to support and promote a commercially successful and growing UK investment management industry as we seek to improve the financial outcomes for customers - savers and investors.

6. Key facts about NEST: From October this year, the Government is introducing reforms that mean employers will have to enrol most of their workers into a workplace pension scheme that meets or exceeds certain government standards. They’ll also need to make a minimum contribution for many of these workers.

NEST is a national trust-based defined contribution workplace pension scheme available to all employers to help them meet their new duties. It is designed around the needs of people who are largely new to pension saving, with clear communications, low charges and easy online tools and services. It is run on a not-for-profit basis and has a legal duty to act in its members’ interests. NEST has a public service obligation to accept any employer who wants to use the scheme to meet their duties, large or small, as a sole scheme or alongside other provision.

7. NOW: Pensions is a new multi employer trust, which has been operational from 1 January 2012. The investments are managed by NOW: Pensions Investments, a subsidiary of ATP in Denmark and the administration is carried out by Paymaster, an established UK third party administrator. The NOW: Pension Trustee Directors, whose role is to safeguard the interests of members, comprises well-known industry figures with different areas of expertise:

  • Nigel Waterson, former Shadow Pensions Minister
  • Imelda Walsh, former Group HR Director of Sainsbury’s
  • John Monks, member of House of Lords and former General Secretary of ETUC and TUC
  • Christopher Daykin, former Government Actuary
  • Win Robbins, former Head of European Fixed Income at Barclays Global Investors
  • Lars Rohde, CEO of ATP Group

8. The TUC is the voice of Britain at work. With 54 affiliated unions representing over 6 million working people from all walks of life, we campaign for a fair deal at work and for social justice at home and abroad. We negotiate in Europe and represent British workers across the world. At home we build links with political parties, business, local communities and wider society. The TUC campaigns on economic and social issues, from pay and pensions to job support for young people, and lobbies the government to implement policies that will benefit people at work.

9. Which? is a consumer champion. We work to make things better for consumers. Our advice helps them make informed decisions. Our campaigns make people’s lives fairer, simpler and safer. Our services and products put consumers’ needs first to bring them better value. Contacts:

NAPF: Paul Platt, Head of Media and PR, 020 7601 1717 or 07917 506 683, [email protected]

ABI: Linsey White, Media Relations Officer, 020 7216 7415 or 07885 998 011, [email protected]

B&CE: Jo Gibbs, Corporate Communications Manager, 01293 586541 or 07775 576398, [email protected]

FSB: Pierre Williams, Head of Media, 020 7592 8128 or 07917 628998, [email protected]

IMA: Navdeep Sidhu, Press Officer, 020 7831 0898 or 07843 517 618, [email protected]

NEST: Heather Tilston, Head of Media and PR, 020 7940 8582 or 07943 501835, [email protected]

NOW: Pensions: Shirley Hatherton, Lansons: 020 7294 3615 

TUC: Rob Holdsworth, Senior Campaign and Communications Officer, 020 7467 1372 or 07717 531 150, [email protected]

Which?: Meredith Barker, 020 7770 7699 or 07970 132 811, [email protected]


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