The National Association of Pension Funds (NAPF) has welcomed the Department for Work and Pensions’ (DWP) decision to ensure lower charges for defined contribution (DC) default funds but argues that good quality schemes, able to demonstrate the overall benefits of higher charges to their members, should not be punished.
Commenting on the DWP’s Green Paper on DC pensions charges, published today, Joanne Segars, NAPF Chief Executive, said: “We welcome the focus on value for money but caution that charge caps are just one aspect of good value in defined contribution schemes, along with appropriate default funds, good governance and clear communications. We do not think that the Government’s recommendation for provider-level independent governance committees goes far enough and risks not being aligned with the long-term interests of scheme members. We believe employer-level independent governance committees would work better for scheme members.
“The charge cap will apply from April 2015 and this is the same date the major reforms announced in the 2014 Budget will come into force. The reforms to pensions announced in the Budget are still being digested but it is abundantly clear that pension schemes will be expected to deliver the lion’s share of those changes in the coming months. We fully support steps that give pension schemes the freedom to offer their members appealing and good value ways to save for their retirement, but the right timescales and proper guidance need to be made available to pension schemes so they can provide their members with a consistently high quality service.”
The NAPF has led the way on industry initiatives to increase the transparency of charges. In 2012 we published Pensions Charges Made Clear: Joint Industry Code of Conduct to increase disclosure and transparency in the costs and charges take out of savers’ pension pots.
