Only a few days to go: We’re raising £25,000 to keep TheyWorkForYou running and make sure people across the UK can hold their elected representatives to account.Donate to our crowdfunder
I congratulate my hon. Friend on his campaign. Transparency is a key area. Hidden costs and charges often erode savers’ pensions. We are committed to giving members sight of all the costs that affect their pension savings. He asks for more detail. We plan to consult later in the year on the publication and onward disclosure of information about costs and charges to members. In addition to the Bill, other things are clearly required to give greater confidence in the pensions system. Greater transparency is clearly one of the steps forward. I completely agree with him on that.
As I was saying, we are keen to remove some of the barriers that might prevent people from accessing pension freedoms. The Financial Conduct Authority and the Pensions Regulator indicate that significant numbers of people have pensions to which an early exit charge is applicable. The Bill amends the Pensions Act 2014 to allow us to make regulations to restrict charges or impose governance requirements on pension schemes. We intend to use that power alongside existing powers to make regulations to introduce a cap that will prevent early exit charges from creating a barrier for members of occupational pension schemes who are eligible to access their pension savings. The FCA will introduce a corresponding cap on early exit charges in personal and stakeholder pension schemes in April this year.
The Government intend to use that power together with existing ones to make regulations preventing commission charges from being imposed on members of certain occupational pension schemes when they arise under existing contracts entered into before
In conclusion, we believe that the Bill is an important and necessary legislative step to ensure that essential protections are in place for those saving in master trust pension schemes. With many millions of members enrolled in such schemes, it is important that we act now to ensure that members are protected equally whatever type of scheme they are in. The measures proposed in the Bill have been developed in constructive consultation with the industry and other stakeholders, so we have confidence that they are proportionate to the specific risks in master trusts and will provide that necessary protection. In turn, that helps to maintain confidence in pension savings, and particularly in automatic enrolment. By making it easier for people to save through a workplace pension, the Government are building a culture of financial independence and long-term saving.
The Bill will also ensure that people are not unnecessarily dissuaded from taking advantage of the pension freedoms by high early exit charges. The Government have given people greater flexibility to take their pension savings, rewarding those who have worked hard and saved for their future. This is a focused Bill that specifically concentrates on the action we must take to cement the reforms we have already made, and I commend it to the House.