Labour’s Shadow Pensions Minister Gregg McClymont and I, are today publishing “Pensions people can trust” as Labour sets out its ambition to end private pension rip offs and create the world’s best private pension system for British pensioners.
The Policy Review document, developed over months of consultation, sets out Labour’s new policy agenda highlighted by Ed Miliband, who talked about taking on private pensions rip-offs at this week Press Gallery Lunch, and just months ahead of the October launch of the ‘auto-enrolment’ system which will see an extra 10 million automatically brought in to private pension schemes in the coming years.
Labour legislated for the new system of private pensions for all with cross party support following the Turner Report. The new “something for something” pensions see workers’ contributions equally matched by government and employers.
Labour is determined to be the party of hard-working savers. That’s why I’m saying very clearly today that I want to see the best private pensions system, working for people who do the right thing and save for the long term.
Right now, a worst case scenario could see a pensions saver lose up to half of their pension thanks to hidden costs and charges. That’s wrong and it shouldn’t be allowed.
We all know we need to save more for the future. That means we need a system that builds your pensions pot, not eats your pension pot.
We’ve got some great pensions companies in Britain. But with an extra 10 million about to be brought into private pensions we’re determined to make sure savers are served by every pensions company playing to the standards of the best.”
Gregg McClymont MP, Labour’s shadow Pension’s Minister added:
“We’ve set out where we think the current system does not work for pension savers. The government should deal with these issues as a matter of urgency. In the coming months we’ll be talking to people up and down the country to see how we can get this right, because with the introduction of auto-enrolment just round the corner, we’ve got to get this right.”
The Policy Review document;
∙ Spells out the costs and charges savers can face, and the problems in the system – hidden charges, rip-offs in the annuities market, and penalty charges for people who change jobs and exit charges for savers switching schemes.
∙ Looks to the Australian system where the implementation of the Cooper Review is set to create a simpler and more cost effective system from 2013 by opening up the scheme to new levels of transparency
∙ Addresses the root causes of the problem from – lack of simplicity, transparency, accountability, scale and restrictions placed on the low cost high quality national not for profit Trust – NEST
∙ Includes comments from across the industry including representatives of; The Pensions Specialist, The True and Fair Campaign, The Saga Group, First Actuarial and Hargreaves Lansdown PLC, as well as Lord McFall, the former Chair of the Workplace Retirement Income Commission.
Notes to Editors
Attached below is the document “Pensions people can trust.”
Selected Comments from the document:
“If the pension is to re-engage the trust of consumers then transparency of costs, charges and restrictions is an absolute requirement. This transparency must cover all costs and charges, not only those directly paid by each individual member but any charges which will reduce the return on their investments. As an industry these charges are known as they contribute greatly to the profitability of pension providers and fund managers and their shareholders. This information should be freely available as it clearly is in the public interest. A pension plan is a long term commitment for both parties and long term relationships must be based on trust and honesty.”
Douglas R.G. Baillie, Senior Partner of The Pension Specialist
“It is vital that customer interest is looked after better by the annuity market. Currently, most people are at risk of buying the wrong kind of annuity and obtaining a poor rate, with nobody obliged to advise them of what they need to consider before buying this irreversible, once-in-a-lifetime product. Anyone in poor health, or who has a partner, or who wants inflation protection may not realise that they need a special type of annuity until it is too late. Commission is dedicated from the pension fund to cover advice, even if no advice is given. This is not in the customer’s interest.”
Dr Ros Altman, Director-General of the Saga Group.
“ Hargreaves Lansdown believes that the pensions industry should always look to the best interests of investors. The special restrictions imposed on NEST simply make pensions more complicated and for this reason we support the proposal that the restrictions should be lifted. NEST will serve a useful purpose as an underpin for auto-enrolment, and any commercial company that fears its own offering is not competitive should look to the quality of their own product or service, not seek to restrict NEST”.
Ian Gorham, Chief Executive of Hargreaves Lansdown PLC.
The Comments provided by stakeholders in the attached document illustrate their view on a particular policy issue. Their Comments do not necessarily imply that they support all the views expressed in this document and they do not imply that they support the Labour Party.