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Fri, 10 July 2020

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MPs accuse pension funds of making a 'fat living' from savers with hidden fees

MPs accuse pension funds of making a 'fat living' from savers with hidden fees
2 min read

Too many pension funds are making a "fat living" from savers through hidden fees, a cross-party group of MPs has warned.


The Commons Work and Pensions committee called on the Government to force funds to disclose all charges in a bid to stop them "misinforming, mischarging" and "overcharging" people who have put aside cash.

In a hard-hitting new report on the pensions industry, the committee said it was "unconvinced" firms could provide "clear, transparent information to pension schemes about the costs and charges of investments".

And it urged ministers and regulators not "wait for the industry to fail to act voluntarily as they have so many times in the past", instead calling on them to making it a legal requirement for fees to be published in a uniform way.

Ministers introduced a charge cap on defined contribution pension schemes in 2015 - but the committee said it had led to "wildly different outcomes" with some seeing "their savings completely wiped out" because too many schemes are still "simply not aware of their costs".

The team of MPs flagged one pension fund which initially claimed to have £10m in management costs - before revising that upwards to £92m. 

Committee chair Frank Field said: "Ripping off pension savers could be eliminated. The select committee is calling on the Government to shine the searchlights into that part of the financial industry that has settled down to misinforming, mischarging, overcharging and making a fat living off the hard-earned savings of pensioners. 

"Government and regulators should not wait for the industry to fail to act voluntarily as they have so many times in the past. It must put the full force of the law behind such changes."

'DECISIVE'

A spokesperson for the Department for Work and Pensions said: "We have taken decisive action to limit charges and make the costs of saving into a pension more transparent."

Meanwhile the Financial Conduct Authority, which regulates the industry, denied that the organisation had too few staff to police pensions.

A spokesperson said: "Whilst there are 10 full-time dedicated permanent staff working on this, overall we currently have over 100 full-time staff working on pension issues, including pensions scams."

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