Pension companies should follow the lead of utilities in being required to alert customers to the best value option for their savings, a leading consultancy has proposed.
The idea is part of a 'white paper' launched last night by JLT Employee Benefits at a Liberal Democrat conference event in Glasgow, where automatic enrolment into pensions at work was debated by a panel featuring Westminster pensions minister Steve Webb.
"In relation to pension scheme charges, providers should be required to follow the practice of some utilities by introducing 'tariff checks' and telling consumers when they might save money by moving their pension savings," the JLT paper says. It says all auto-enrolment schemes should provide advice to members on their retirement options, companies winding down final salary schemes should be allowed more flexibility, and the government should promote a major focus on health at work to enable people to work longer.
On Mr Webb's plans facing resistance from the industry, for a "pot follows member" guarantee for anyone moving jobs, JLT says: "The concept of automatic transfers should be extended to all transfers. However, to protect members from fraud and from themselves, trustees should be allowed to refuse a transfer request where they have a reasonably founded concern that pensions liberation is taking place."
The minister has said the government was working to "stamp out" pensions liberation fraud, which an industry expert said costs at least £500 million a year in lost savings.
Malcolm Paul, chairman of JLT Employee Benefits Scotland which employs 200, said auto-enrolment had so far recorded extremely low opt-out rates even in times of austerity, and was a significant step forward. "The focus should now be on ensuring that every £1 paid by members is made to work as hard as possible to improve retirement incomes."
The paper also proposes that member communications should "focus on pension outcomes, expressed as a replacement income, not fund values", and that consideration be given to a "pension risk simulator" to illustrate the uncertainties of future benefits, which could be run by the Pensions Regulator or Money Advice Service.
A recent report by JLT found a significant proportion of large employers taking little interest in their pension schemes or their employees' health and fitness, with only one company in five in Scotland offering 'salary sacrifice' to boost contributions and only 23% giving employees help with buying their annuity on retirement.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article