MPs investigating the state of the UK pensions industry branded it ‘a bit of a cowboy area’ after the pensions minister gave it a rating of 8 out of 10.
Guy Opperman was rating the level of understanding and transparency as he gave evidence to the Works and Pensions Committee who are investigating pension costs and transparency after a previous inquiry found that the UK industry was ‘a complicated world’.
Speaking at the committee’s fourth and final hearing Mr Opperman said the industry is trying to help savers to understand how pensions and investments work and gave it a high transparency rating, but the committee reacted with surprise at his statement.
The 2017 inquiry into pension freedom and choice which prompted the latest probe found ‘complicated charges faced by savers, schemes and employers’.
Also giving evidence was Treasury economic secretary John Glen who told the committee: “There’s always more things that could be done, but we’re doing reasonably well.”
He added that the industry should lead the implementation of cost disclosure templates and asset managers and pension schemes should be reporting on costs and charges rather than regulators and the government.
Mr Opperman said the industry was attempting to simplify the information given to savers and believed the solution was to provide the information online.
He said: “Traditionally, a pension statement could be 45 pages long. We’re trying to come up with a two-page paper-based statement which explains exactly what is in the pension.
“You also then make it digital, where people can access a separate website and get more detailed information about the costs and charges if they so wish.”
An update provided by The Pensions Regulator (TPR) has shown the number of pension master trusts has been halved in the face of new rules over how they operate.
Big companies are able to run their own workplace pension schemes under the new auto-enrolment rules, but smaller companies need to band together under the auspices of a master trust so they can meet their obligations.
These schemes are run by a number of independent trustees for the good of their members, but concerns have been expressed that some are too small to survive which could threaten the savings of anyone invested in them.
TPR stepped in to make sure any trust wanting to continue in business had to be fit for purpose and held enough money to cover the worst-case scenario of having to transfer their members to another scheme or winding up their own with any cost to the savers.
There were 90 master trusts in the market in November last year which has been cut by more than half as the date passed for them to apply for authorisation.
Three have already been authorised and another 10 have been granted an extension for their application process.
A further 27 have applications pending while nine others have indicated they will be leaving the market as soon as transfer of their members to other trusts has been completed.