Shadow pensions minister Alex Cunningham says the FCA's final report on the asset management market is a turning point and urges the government to take action
Saving for a pension and buying a fridge shouldn't be so different. You look at the performance information, compare the costs and decide which product you wish to buy.
Unfortunately, this isn't quite the case; no-one knows how much their pension costs, as the charges applied to it are opaque and complex, leaving room for high prices to be paid for a poorly performing pension.
This could all be about to change today however, as the Financial Conduct Authority (FCA) publishes its final review of the asset management market. The recommendations in the report will impact upon the second-largest industry in the world, one which looks after nearly £7trn of our savings.
This report could not come soon enough. For too long, serious questions have been asked about the value for money that investors - a group that includes all of those saving for a pension - are getting in return for stashing their savings into a pension pot.
As the FCA has recognised, pension charges are both extraordinarily high and desperately opaque. This market is alone in offering consumers such little information about the product that they are buying, either with regard to performance or in terms of cost. This has to change; in no other area of our lives would we buy something without knowing its price.
The FCA's recommendations very much chime with Labour's approach to transparency, hammered home during the debates on the Pensions Schemes Bill but dismissed by the government. It's not enough for someone to think all they're paying is the half or 1% on their statements.
A Labour government will implement the recommendations in full with particular attention paid to; strengthening the duty on fund managers to act in the best interests of investors; ensuring the disclosure of a single, all-in fee to investors; a consistent and standardised disclosure of costs and charges to institutional investors and the removal of barriers to pension scheme consolidation and pooling to drive efficiency and better returns.
In order to guarantee an open and competitive market, we will ensure that trustees are given the power to collect and report on all costs, that they are able to understand the full performance of their investments, and that can access and then report honest information to their savers.
Fund managers should be required to reveal all the costs associated with their activity, as we would expect in any consumer market. This will give trustees and savers the information necessary to compare and contrast cost and performance between managers, improving competition in the market.
For those rolling their eyes at the idea of better regulation for this sector to protect savers, it is worth remembering that an open and transparent cost regime will protect sponsoring employers too, who will be able to deliver the best possible pensions to their employees at less cost.
But will the government act? The last one failed to, and with a new secretary of state and pensions minister we shall have to wait and see if the promises made by their predecessors are fulfilled. For Labour, transparency in pensions saving is the foundation from which a new pension system can be constructed - one that works for the many savers, not just the few who are supposed to serve them.
Alex Cunningham is the shadow pensions minister and Labour MP for Stockton North