The Financial Conduct Authority (FCA) will bring forward proposals designed to promote value for money for workplace pension schemes members, a consultation paper says.
The two regulators announced plans to work collaboratively to tackle the key risks facing pensions in the next decade in 2018 including value for money and charging transparency.
The FCA said today that it hopes a new consultation will make it simple for independent governance committees (IGCs) and governance advisory arrangements to compare the value for money of pension products and related services.
Workplace pension scheme members are there employers are a key target audience for the consultation, the FCA said, along with IGCs and their advisers, consumer representative groups, trade bodies in financial services, and external organisations or charities with an interest in the ageing population.
Commenting on the consultation, Isio partner Richard Birkin said independence and diversity in governance board were "essential elements" for ensuring value for money.
"A lack of independence and diversity can result in competing interests taking precedence," he added. "Governance boards and underlying pension providers have largely grasped this, and when we walk employers and ceding trustees through a provider selection exercise, a strong governance structure including independence and diversity have moved up their shopping list.
"The carrot has worked for a large part of the industry and today's FCA announcement is the stick for those that haven't kept pace."
Aegon pensions director Steve Cameron said: "It makes sense for a common definition of value for money to apply across the whole workplace pension market, covering both group personal pensions and master trusts.
"We are pleased that the FCA consultation avoids excessive prescription and is instead focussing on higher level principles as this will allow IGCs to continue to reflect the profile of their provider's workplace pension book and the quality of services offered in their value for money assessment."
Comments on the consultation paper will be accepted until 24 September with the FCA and TPR expecting to publish a corresponding policy statement by the end of the year.
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