A progress update has today been published by the Independent Project Board responsible for overseeing the audit of charges and benefits in legacy defined contribution workplace pension schemes.
Carol Sergeant, Chair of the Independent Project Board comments:
“This report provides an update of the IPB’s progress to date on the audit of charges and benefits in legacy defined contribution workplace pension schemes. It outlines the approach and methodology being used to undertake the review. A final report will be published in December 2014. It will set out the charging structures of in-scope workplace pension schemes as well as showing the impact of these charging structures on different types of scheme members. The final report will also include any IPB recommendations for industry-level actions that may be needed to address in-scope schemes assessed as having high charges taking into account any relevant benefits.”
The OFT's report on the defined contribution workplace pensions market published in September 2013 identified, amongst other things, around £30 billion of savings in old (pre 2001) and other high charging contract and bundled-trust pension schemes that may not be achieving value for money by the standards of modern defined contribution workplace pension schemes.
As a remedy, and as an alternative to a Market Investigation Reference (MIR) to the Competition Commission (CC), the Association of British Insurers and its members agreed to undertake an audit of these schemes that will be overseen by, and report into, an Independent Project Board (IPB).
Minister for Pensions Steve Webb said: "I welcome the progress made by the audit and I am looking forward to its findings later in the year.
"The OFT identified £30 billion of savers' money in pension schemes with charges at risk of being poor value for money.
"It is right that the Independent Project Board looks closely at these arrangements. It is important that all schemes give savers the confidence that they are acting in their best interest."
The Audit is collecting data on all workplace pensions sold before 2001, and all post-2001 workplace pensions with charges over 1% per annum. The audit will identify the impact of the charges and benefits on different types of members of these schemes, to enable relevant governing bodies, that is, Independent Governance Committees and trustee boards, to consider whether those charges are appropriate for the scheme members. The IPB will also assess data submitted to the OFT covering schemes with charges above the DWP charge cap of 0.75% announced on 27 March 2014 which are not included in the audit.
The IPB consists of representatives from DWP, the regulators and the industry as well as consumer representatives. The full list of IPB members is below:
Carol Sergeant, Independent Chair
Charlotte Clark, Department for Work and Pensions
Ed Smith, Competition and Markets Authority
Nick Poyntz-Wright, Financial Conduct Authority
Andrew Warwick-Thompson, The Pensions Regulator
Doug Taylor, Independent Consumer Expert
Michelle Cracknell, The Pensions Advisory Service
Joanne Segars, the National Association of Pension Funds Limited
David Hare, Institute and Faculty of Actuaries
Otto Thoresen, Association of British Insurers
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Matt Adams in The Pensions Regulator press office:
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