Pension providers have made “significant progress” to reduce costs and charges, according to the Financial Conduct Authority (FCA) and the Department for Work and Pensions (DWP). But many savers are still being hit by high pension charges.
The announcement follows recommendations set out by the Independent Project Board (IPB), which was created by the Association of British Insurers after the, now defunct, Office of Fair Trading produced a market study in September 2013 (link courtesy of our sister publication, Money Observer), which found that £30 billion of savers’ money in defined contribution schemes (DC) were “at risk of delivering poor value for money”.
However, it’s not all good news, as some savers are still at risk of high pension fees. The FCA says that for 16% of assets under management in contract-based schemes and 15% of assets in trust-based schemes “the progress is unsatisfactory or unclear, with customers still at risk of high costs and charges”.
The regulator goes on to say that: ”The FCA and DWP will shortly be contacting these providers and will expect them to explain the reasons behind this and to ensure that savers are being treated fairly.”
Andrew Bailey, chief executive of the FCA says: “We have seen good progress towards the goals that the IPB laid out but this is not the end of the story.”
Richard Harrington, Minister for Pensions, adds: “I am pleased that more than a million pension savers will benefit from our push to curb excessive charges in legacy schemes. Nevertheless, some people are still at risk of high charges, so I shall be seeking assurances from the providers of those schemes, that they will be taking steps to resolve this issue.”