In response to the Office of Fair Trading’s progress update on its investigation into workplace pensions, Which? executive director, Richard Lloyd, said:
“The issues raised by the Office of Fair Trading are further evidence of why we need new, minimum standards for workplace pensions as soon as possible. Consumers need to be confident that the pension industry is looking after their money and they are being automatically enrolled into high quality and good value schemes.
“We also want to see a ban on penalty charges for people who switch jobs as this can have a significant impact on the value of their pension pot.”
1. Which? has previously successfully campaigned for an end to consultancy charges on auto-enrolment pension schemes. In January 2013, we wrote to the Department of Work and Pensions, the Financial Conduct Authority and the Pensions Regulator. We also highlighted the issue in Which? magazine in April 2013 and in May this year, the Government announced a ban on charges for auto-enrolment schemes.
2. In March 2013, Which? surveyed 891 UK working adults (18-65) who earn enough to be eligible for auto-enrolment and found:
– 35% of people who have opted out, or say they will opt out, do so because they do not trust the pension industry to look after their money, and 22% because they are concerned about the quality of the scheme.
3. Which? has already called for a ban on “deferred member penalties” (or “two-tier” charging), where the charges made by the pension scheme can double when you switch jobs. The Work and Pensions select committee supported our call for a ban on these charges.