A code of conduct on pension charges levied by providers and advisers has been launched to bring consistency to the workplace pension market.
The code, drawn up by industry bodies such as the Association of British Insurers (ABI) and the Investment Management Association (IMA), aims to bring consistent disclosure of charges and investment costs to firms as auto-enrolment beds in.
It will apply to all parties providing services to employers in setting up and administering pension schemes for auto-enrolment - including insurance companies, financial advisers, and any other professionals offering paid advice. Trust-based pension schemes will also be covered.
The code specifies that all charges are clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges levied and the corresponding services.
The code also states that employers must be able to see examples of how different levels of charges and charging structures could affect the pension pots of their employees, either through a document or a dedicated web tool.
It will come into effect in two stages. The first stage begins on 1 January when the code should be used as a guide for best practice.
The second stage starts one month after the launch of the dedicated web tool, which is expected to be available from 1 April 2013 and is being produced by the ABI. During this stage all the provisions of the code will apply.
ABI director of life, savings and protection Steve Gay (pictured) said: "Pension charges have reduced dramatically in recent years but we need to ensure that information is freely available to employers in a format that is concise and meaningful, and helps them to make the right decisions."
Jonathan Lipkin, associate director of pensions and research at the IMA, said: "The IMA believes that demonstrable consistency of charges and costs disclosure is essential. This code provides a template that will apply across the pensions market, and we welcome the progress made over the past twelve months.
"But this is the beginning of the road. Much more has to be done to ensure that scheme members themselves feel greater confidence in DC schemes, whether trust-based or contract-based. This means an emphasis on overall governance as much as disclosure."
The National Association of Pension Funds (NAPF) and the Society of Pension Consultants (SPC) also helped draw up the code.
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