All pension savers approaching retirement will benefit from the advice of an independent broker to make sure they get the best deal from their pension pot, the Labour Party has promised
Setting out its pre-election pitch to pension savers, it said it would clamp down on 'unfair charges' and 'rip-off' fees. It intends to force pension providers to reveal the full range of charges and transaction costs that are eating into savings.
Quoting figures from the Department for Work & Pensions, Labour said someone who saves throughout their working life could end up losing almost £230,000 from their pension because of schemes charging fees of 1.5% of savings.
Shadow work and pensions secretary Rachel Reeves said: 'Rip-off pension fees and charges are costing savers thousands of pounds. An astonishing £1bn a year is lost because people aren't offered the best deal when they approach retirement.
'A Labour government will ensure independent brokers help people turn their hard-earned private pension pots into a secure retirement income, saving thousands of pounds. We will also make sure that savers income is protected from excessive fees and charges.'
Labour has proposed an annual charge cap of 0.5% on pension charges.
In response to Labour's proposed new measures, Barnett Waddingham partner Malcolm McLean said: 'There is, unfortunately, a distinct lack of clarity as to exactly how these proposals might work in practice and what the longer term impact might be.'
On the introduction of independent brokers, McLean made it clear that Labour disregarded that fact that brokers do not give financial advice and are not accountable for any actions the saver may take in consequence.
'We need a lot more clarity and possibly a slight change in emphasis if the Labour pension policy is to deliver what we would all like to see.'
Pensions minister Steve Webb last year consulted on a capping regime with a plan to bring in a cap from April this year. But last month, Webb confirmed that the introduction of a charge cap for defined contribution schemes would be delayed until at least April 2015. He said the timing of changes and the potential effect on auto-enrolment 'didn't quite stack up'.
Details of the potential charge limit are still unclear.