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B&CE, provider of The People’s Pension has today criticised the government’s much-hyped consultation on the capping of pension charges.
While supportive of the attempt to drive better outcomes for savers, the auto-enrolment provider argues that the consultation has missed the bigger picture and fails to deliver much needed reform to how pensions are charged for. As it stands the government’s recommendations lack detail and an opportunity has been lost to give a clear direction to providers and employers.
Darren Philp, Head of Policy at B&CE, said:
“While we welcome this consultation and the potential for government action to drive value for money for pension savers, we are concerned that the government has missed a trick with its approach. Instead of picking up the gauntlet thrown down by the recent Office of Fair trading report to improve transparency and comparability across pensions, the government’s accommodating approach and lack of detail means that it is a consultation built on sand.”
“What we need is a simple standard charging structure or, at the very least, a sensible and fair way of comparing different providers using a common currency. Our response to the consultation highlights that the government has ducked the issue to the potential detriment of savers, providers and employers.”
B&CE’s strong view is that providers should compete not on how they charge, but on what they charge and on the quality of the product they offer. It is concerned about potential unintended consequences arising from the government’s approach. A particular concern is that, by reinforcing dual pricing models as a legitimate way to charge for pensions, the rest of the industry might follow suit. Giving this official stamp of approval could lead to more complexity, not less.
“A primary focus for providers should be to ensure that savers get an excellent product that is delivered at a low price. There are a lot of myths about what different charging structures mean for the saver and what we are calling for is transparency and comparability.
“This is particularly important given that people are likely to be moving their pension savings more frequently under the government’s pot follows member approach. Any charge cap needs to apply consistently and fairly across different ways of charging for pensions, not to do so would be anti-competitive and unfair on the consumer.”
The People’s Pension operates a simple and transparent charging structure of a 0.5% Annual Management Charge with no hidden charges, fees on transfers, active member discounts or any other additional charges for employers.
Notes to editors
|Chris Tuite||Darren Philp|
|Account Director||Head of Policy|
|Rostrum Communications||B&CE / The People’s Pension|
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