Jon Cruddas, Labour MP for Rainham and Dagenham, has called on pensions minister Steve Webb to encourage transparency from pension fund managers.
During a Parliamentary debate last night, Cruddas said pension savers are ‘shouldering more of the investment risk to their savings' with the growth of defined contribution (DC) schemes and the advent of NEST and auto-enrolment. Greater transparency is therefore essential, he said
Cruddas particularly attacked fee transparency and the role of advisers, saying: "we have seen the growth of an enormous cadre of agents and intermediaries who extract huge fees at the direct expense of ordinary savers."
He also said the large influence pension funds have in the economy necessitates more scrutiny of their activities. Cruddas claimed part of the financial crisis was due to pension funds engaging in "the same short-termist strategies and herding behaviour as the rest of the market".
"Ordinary people cannot be expected to know which asset manager their pension fund uses and proactively to seek out that manager's disclosures.
"Improvements in fund manager transparency will give savers the accountability and visibility that they deserve only if pension funds play their part too," he said.
The MP also criticised The Pensions Regulator (TPR) for not producing official guidance on how pension funds should apply the recently-published stewardship code. He said leaving the role of pension funds to the National Association of Pension Funds (NAPF) is a ‘less-than-ideal situation'.
Cruddas said voting disclosure should be mandatory for asset managers, and the government should clarify pension funds' role in transparency by amending regulation or doing so via TPR guidance.
Webb said a number of the disclosure issues will be tackled in the Department for Business, Innovation and Skills' (BIS) latest consultations on company reporting and short-termism and market failures in equity markets.
The minister also said he would raise the issues with the chair of TPR, Michael O'Higgins.
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