Industry publishes joint code on pension charges | PLSA
Industry publishes joint code on pension charges

Industry publishes joint code on pension charges

28 November 2012

A new joint industry Code of Conduct for disclosing information to employers on the charges made on workplace pensions has been published by a group of pensions experts today.

The Code enables, for the first time, the consistent disclosure of charges and investment costs across the workplace pensions landscape.

The Code specifies that all charges are clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges levied and the corresponding services. The Code also says that employers must be able to see examples of how different levels of charges and charging structures could affect the pension pots of their employees, either through a document or a dedicated web tool.

The Code has been developed by a working group made up of trade, consumer and industry organisations, and pension providers.

It is endorsed by the National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), in association with the Investment Management Association (IMA) and the Society of Pension Consultants (SPC). These organisations encourage their members and other participants in the pensions market to follow the practices set out by the Code.

It is intended to apply to all parties providing services to employers in setting up and administering pension schemes for auto-enrolment, including insurance companies, trust-based pension schemes, financial advisers, and any other professionals offering paid advice.

The Code will come into effect in two stages. The first stage begins on 1 January 2013 when the Code should be used as a guide for best practice. The second stage starts one month after the launch of the dedicated web tool, which is expected to be available from 1 April 2013 and is being produced by the ABI. During this stage all the provisions of the Code will apply.

Joanne Segars, Chief Executive of the NAPF, said:

“Auto-enrolment will help get millions of workers saving for their old age, but it will only truly succeed if people join a pension that offers good value for money, and if they then stick with it. Charges are a big concern for many people, and this code will help put a spotlight on the fine print.

“Employers need to be able to see more clearly what is being charged and why. They will then be more likely to pick the best pension for their staff. The code sets out a template for explaining charges that will make it easier to compare the cost of pension A with pension B.”

Steve Gay, Director of Life, Savings & Protection at the ABI, said:

"The aim of auto-enrolment is to create a retirement saving habit amongst millions of consumers, so it is extremely important that we raise confidence in pensions through transparency and value for money.

“The new code will allow employers to make a better choice of pension scheme by providing them with clear and consistent information on charges, costs and services. Pension charges have reduced dramatically in recent years but we need to ensure that information is freely available to employers in a format that is concise and meaningful, and helps them to make the right decisions.”

Jonathan Lipkin, Associate Director of Pensions and Research at the IMA, said:

“The IMA believes that demonstrable consistency of charges and costs disclosure is essential. This code provides a template that will apply across the pensions market, and we welcome the progress made over the past twelve months. But this is the beginning of the road. Much more has to be done to ensure that scheme members themselves feel greater confidence in DC schemes, whether trust-based or contract-based. This means an emphasis on overall governance as much as disclosure. We look forward to working with regulators and other stakeholders in taking this forward.”

Roger Mattingly, President of the SPC, said:

"It is important to ensure that charges are transparent, comparable and fair, and we support this initiative to address this.

“There is welcome recognition that employers' decisions should be driven by value, not just cost. A ‘race to the bottom’ on charges would be fraught with danger for members. This needs to be kept firmly in view when the code comes into operation.

“We also welcome the acceptance that the code cannot be applied mechanistically as a one size fits all template. It will be less relevant in some situations than others, particularly in cases of existing client, adviser, or provider relationships."


Notes to editors:

1. The document Pension Charges Made Clear: A Joint Industry Code of Conduct is here.

2. We are grateful to the following organisations who guided the development of this Code of Conduct by participating in the Working Group: 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.

3. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

4. 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.

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. The SPC is the representative body for a wide range of providers of advice and services to workplace pension schemes and the employers supporting them. The membership includes accounting firms, lawyers, investment houses, insurance companies, investment performance measurers, consultants and actuaries, independent trustees and external pension administrators. Thousands of individuals and pension funds use the services of at least one SPC Member - organisation, including the overwhelming majority of the 500 largest. SPC's membership collectively employs some 15,000 people."



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]

IMA: Mona Patel, Head of Communications, 020 7831 0898 or 07834 089332, [email protected]

SPC: John Mortimer, 020 7353 1688, [email protected]


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