Lord Mike German suggested amending the Pension Schemes Bill to make pension funds more accountable to savers by banning non-disclosure agreements. These agreements are concluded between pension funds (asset pools providing pensions for employees) and asset managers (people who maintain and supervise financial portfolios).
Lord German’s proposal is targeting two things: First, fees and charges paid by pension funds to asset managers would need to be disclosed. In our research report “Pension Savings: The real Return” we stressed that in the UK, “there is a lack of transparency and comparability of charges disclosed by pension providers.” We found out that the Annual Management Charges decreased from 0.79% in 2001 to 0.51% in 2012, but this indicator does not reflect all charges and its coverage varies from one fund to another or even from one member to another in any given fund.
Second, according to Lord German’s proposal, pension funds would be obliged to inform the savers about decisions taken at company meetings (e.g. executive pay, selection of asset managers), should the saver request such information. As it is, savers are only confronted with information that is “technical [and] inaccessible”, complained ShareAction.
“The purpose of this amendment is to try and establish whether the government is prepared to give people the rights that they need. [Savers] are not disinterested in their pensions,” commented Lord German whose proposal could enter law in March.
The third potential change comes from pensions minister Steve Webb who “wants to allow current pensioners to be able to sell their annuity policies, giving them an immediate lump sum rather than a guaranteed income.” Webb would like to start a public consultation and submit an agreed Coalition plan with detailed description of the envisioned reforms before the May elections.