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ABI ANNOUNCES ACTION PLAN ON CLEARER PENSION CHARGES AND COSTS

The Association of British Insurers has set out an action plan for clearer pension charges and costs in a letter to regulators today. The move is designed to improve transparency across the whole of the pensions industry and raise consumer confidence ahead of the introduction of auto-enrolment this autumn.

The joint letter to the Pensions Regulator and the Financial Conduct Unit of the FSA sets out clear priorities for action towards developing an industry protocol by the end of the year that will ensure:

- A consistent and simple disclosure of charges to employees across contract and trust-based pension schemes.

- Transaction costs, such as broking fees, are made available to employees in all contract and trust-based schemes.

- All employees receive regular, clear and meaningful information on charges and transaction costs as their funds build up.

- Existing workplace pension schemes to ensure that employees are provided with clear and comprehensive information on their charges.

Otto Thoresen, ABI Director General, said:

“While charges for contract-based pensions have reduced dramatically in recent years, we must ensure that, across all types of defined contribution pensions, information on charges and costs is available, clear and meaningful, and helps employees make the right decisions about their pension.

“Auto-enrolment will have a critical impact on the future retirement prospects of today’s workers. If we are to minimise opt-outs it will be vital that employees understand what they are paying and have confidence in the pensions they are being auto-enrolled into.

“Both parts of the pensions world need to go further to ensure all workplace savers have the information they need to make the best choices for their future. For too long, different parts of the private pensions system, regulated by two different regulators, have given employees too little information about what they are paying. Openness and transparency are now expected by customers, so we all have to do better. I have written to the Pensions Regulator and FSA to set out what I believe we can achieve together.”

 

Notes for Editors

 

1. The letter to the FSA (Martin Wheatley) and tPR (Bill Galvin) is enclosed.

2. At the moment, workplace contract-based defined contribution schemes, as offered by ABI members, disclose the charge for the scheme to both employers and employees. Any transaction costs that result from the trading necessary to invest the scheme are not disclosed. Workplace trust-based defined contribution schemes do not disclose either the charges or the transaction costs.

3. Where disclosure does take place, the way in which this is done is currently inconsistent which is why developing a consistent regime is so important so customers can make genuine comparisons between the charges and costs they are being presented with.

4. Enquiries to:

Freya Rodger 020 7216 7444 Mobile: 07808 642 972

Malcolm Tarling 020 7216 7410 Mobile: 07776 147 667

Linsey White 020 7216 7415 Mobile: 07885 998011

Sarah Bailey 020 7216 7514 Mobile: 07725 372636

Adeola Ajayi 020 7216 7521 Mobile: 07725 245284

 

5. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.

The ABI’s role is to:

- Be the voice of the UK insurance industry, leading debate and speaking up for insurers.

- Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.

- Advocate high standards of customer service within the industry and provide useful information to the public about insurance.

- Promote the benefits of insurance to the government, regulators, policy makers and the public.

 

The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 26% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 290,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with 28% of its net premium income coming from overseas business.

Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £147 million in benefits to pensioners and long-term savers as well as £60 million in general insurance claims.

 

6. An ISDN line is available for broadcasts.

 

7. More news and information from the ABI is available on our web site, www.abi.org.uk.

 


Last updated 01/07/2016