Statement on ABI Letter on Pension Charges
Commenting on The Association of British Insurers’ plans to make pension charges more transparent, Gina Miller, who spearheads the True and Fair Campaign said:
“We welcome the ABI’s four-point plan to make pension charges clearer to consumers. There needs to be one single number which gives total transparency on all dealing costs and fees. Without this consumers will continue to be misled about the true cost of charges and fees to their pensions and investments. The ABI is right to point out that addressing this is particularly important as auto-enrolement comes into place later this year.
“Over the last seven months the True and Fair Campaign has been calling for a new Code of Conduct that would give consumers 100% transparency on all costs and management fees and full disclosure on where funds are invested. We are pleased to see increasing support within the industry for this cause, but decisive action is long overdue.
“Over the course of a lifetime a small difference in pension fees and charges can make an enormous difference to the size of a pension pot. The various hidden costs including dealing costs will often amount to 1% pa. That may not sound much but someone saving £400 per year for 25 years, i.e. a total of £10,000 would be £3,217 better off if by saving 1% pa their investments grew by just 6% pa rather than 5% pa. Hidden fees, like administration costs and dealing fees can take a significant chunk out of the investment – 32% in this example. A lack of transparency means that more often than not people are unaware of the true cost and the impact that will have on the money they get in their pocket.
“The FSA and government need to urgently bring in change and impose transparency across the industry to restore trust and honesty. Without this, millions of people are likely to opt out of their pension, a scenario that could have devastating consequences in the long term.”
Posted By: True and Fair, 4:56 pm