Pension groups attack ‘misleading’ research
Labour’s warning that pension providers’ hidden fees are eroding as much as half of workers’ pension pots has drawn a stinging attack from industry representatives, who claim the party’s research is “hugely misleading” and has a “back-of-an-envelope feel”.
The comments came as Liam Byrne, the shadow work and pensions secretary, unveiled Labour’s policy review on pensions, which threatens that a future Labour government would impose a cap on fund fees if charges do not come down and calls for a tougher consumer watchdog to protect pension customers.
But Otto Thoresen, director-general of the Association of British Insurers, said the ideas put forward in the review were “disappointing”.
“Most private pensions work well for their customers, charge fairly and give clear information about how they work,” Mr Thoresen said on Sunday. “Charges have been falling steadily for the last decade and the average annual management charge is now just 0.77 per cent. The extra costs Labour highlights are transaction costs that include stamp duty and relate only to particular types of actively managed funds.”
Ed Miliband, the Labour leader, had already described pension charges as the next looming scandal after phone hacking and the fixing of the Libor interest rate, during a parliamentary press gallery lunch last week.
Ahead of the report’s launch, Mr Byrne emphasised that Labour was the party of “hard-working savers” which wanted to protect the 10m workers due to be automatically enrolled into a private pensions system this autumn.
“We all know we need to save more for the future,” he said. “That means we need a system that builds your pensions pot, not eats your pension pot.”
Mr Byrne added: “We’ve got some great pensions companies in Britain. But with an extra 10m 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.”