The People’s Partnership is calling for pensions dashboards to include prominent information on charges and other value for money metrics.
The master trust provider has said that without this information people will make “poorly informed” decisions on transfers and consolidation, which could see them paying more in pension charges – potentially paying more than £2bn in unnecessary charges by the end of the decade.
It adds that it wants to see the FCA Value for Money framework extended so it covers all pension providers, not just those offering lower cost workplace pensions — and it is calling for this information to be clearly displayed as these new dashboards emerge.
The providers says its research shows many people want to switch and consolidate holdings, but find it difficult to compare charges and value for money. This is not helped by the fact some providers levy a percentage fee on assets under management, and others levy a flat administration charge.
Its research found that four out of 10 savers said they wanted dashboards to offer a simple way to compare the overall value for money provided by each of their pensions. This was the second most popular potential ‘feature’ cited, after a projection of the likely value of their pension pot in retirement (cited by 53 per cent of respondents).
Previous research by The People’s Partnership also found that nearly three quarters (72 per cent) of people who had transferred a pension didn’t know exactly what the fees were for their new or old pension, and one in 10 (11 per cent) didn’t think their new pension had any fees.
The research also found that over four in 10 pension savers (42 per cent) say they would be likely to use a pensions dashboard to move their pension from one company to another.
People’s Partnership CEO Patrick Heath-Lay says: “Our research shows that many people find it difficult to navigate and compare their pension options due to overly complex or inconsistent information, leaving them extremely vulnerable in these types of transactions.
“With the arrival of dashboards, we anticipate this confusion will only intensify, making it even harder for savers to make informed decisions.
“We are worried dashboards will increase poorly informed decisions which lead to big losses over time. The risk is particularly severe if providers use dashboards as an opportunity to aggressively market the pensions they offer to consumers, without any way to easily compare options as we know that people don’t shop around for a pension transfer.
“It is vital that simple, easy-to-understand comparisons of value for money are on commercial pensions dashboards when they begin to go live in two years’ time.
“ A simple consumer-facing value for money framework should apply to all pensions, not just relatively low-charging workplace options. Urgent action is needed to stop people from losing thousands of pounds and having to work for years longer before they can retire.”
People’s Partnership has previously revealed4 that nearly three quarters (72 per cent) of people who had recently transferred a pension didn’t know exactly what the fees were for their new or old pension, and one in 10 (11 per cent) didn’t think their new pension had any fees.