A new code of conduct on charging for workplace pensions will help employers to chose the best pension for their staff and encourage retirement saving, according to the National Association of Pension Funds.
A draft version of the code was launched for consultation today by a working group on the issue chaired by the NAPF. The group also includes the Association of British Insurers and the CBI among its members.
There are currently 'big gaps' in regulation and practice which make it hard for employers to compare charges between pension schemes and assess value for money, the NAPF said.
The code aims to ensure all charges on defined contribution pensions are clearly and accurately stated in a written two-page summary before an employer picks a pension scheme.
Joanne Segars, NAPF chief executive, said it would be particularly significant for employers choosing a pension scheme for their workers when workplace pension auto-enrolment begins this autumn.
'Auto-enrolment is just around the corner and many businesses will be looking at pensions for the first time,' she said. 'This code will help employers make the right pension choice for their staff. Greater clarity will make it much more likely people will stick with their new workplace pension if their employer has banked them the best deal possible.'
Brendan Barber, general secretary of the Trades Union Congress and another member of the working group, added: 'This is an important contribution to opening up the mysterious world of pensions charging.
'Selling pensions to employers for auto enrolment is about the only unregulated pension sale allowed, and anything that can help employees and employers work out whether they are getting a good deal is a step forward.'
Current regulation requires contract-based defined contribution pension schemes to offer information to members about charges, but the same requirements do not apply at the point employers pick pension schemes for their employees.
The full list of working group members is: Accenture; Association of British Insurers; B&CE; Confederation of British Industry; Federation of Small Businesses; Heineken; Investment Management Association; Legal and General; National Association of Pension Funds (NAPF); National Employment Savings Trust; NOW:Pensions; Trades Union Congress; Which?; and, Whitbread.
The consultation on the parameters of the code runs until July 4 and the working group aims to launch the final code of conduct in late summer.