Steve Webb has written to the Association of British Insurers (ABI) demanding evidence that consultancy charges levied on pension scheme members are value for money.
Speaking at the Trades Union Congress trustee conference this morning, the pensions minister said: "One of our worries is that people are loading consultancy charges onto schemes and in auto-enrolment it is not the scheme member who chooses; it is the employer.
"So you get enrolled into a scheme, you didn't choose it, and then charges are taken out for consultancy or advice, and the question is: have you benefited from it?
"I have written this week to the ABI asking them for evidence that consultancy charges levied are good value for money for members, not for employers. We have the power to make schemes that are not levying appropriate charges ineligible for AE.
"So we put out that challenge this week. If charges levied are delivering demonstrable value we want to know, but if they are not and they are just a backdoor way of avoiding the retail distribution review, for example, or if they are just another way of raising money for the advisers, then that is not what should be going on."
The challenge to the ABI comes after the Department for Work and Pensions (DWP) said in its report, Reinvigorating Pensions, that it believes charges are falling naturally, but that it will intervene if it perceives scheme charges are too high.
The DWP also said in the report that it is planning to improve the way it monitors charges levied on schemes and their members.
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