As Australia’s superannuation industry undergoes its own grilling at the Royal Commission, the UK Government has announced the Commons Select Committee will hold an inquiry into pension costs and transparency.
The inquiry would examine whether the pensions industry provides sufficient transparency around charges, investment strategy and performance to consumers.
It comes off the back of the Committee’s recent inquiry into pension freedom and choice, which found that some scheme members were being “shamelessly bamboozled” into signing up to unsuitable ongoing adviser fees. The Royal Commission in Australia yesterday focused on the same issue of adviser charges.
The inquiry’s terms of reference specified that it will examine whether enough is being done to ensure individuals:
The Committee said that a rapid rise in enrolment in workplace pension schemes in recent years, combined with a sharp increase in demand for drawdown products spurred by pension freedoms, provided the background to the inquiry.
“These developments have intensified concerns about the effect of investment management charges, transaction, advisory and other intermediation costs, in eroding the value of individuals’ savings,” the Committee said.
“These are part of broader concerns that low levels of customer engagement and understanding, coupled with costly and opaque intermediation, risk leading to poor outcomes for pensioners.”
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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