Work and Pensions Committee inquiry into pension costs and transparency
LITRG welcome the opportunity to provide input into this inquiry – we feel able to comment on the broad issues raised, given the importance of tax across the whole realm of pensions and the way it is inextricably linked with the wider issues of information, risk and return.
In particular we take the opportunity to make the following points on behalf of our constituency:
- Workplace pensions offer less value for money for low paid workers in net pay arrangements who do not receive tax relief to help make up their contribution.
- At the moment, there are real barriers to transferring providers – not only are there the ominous threats of exit charges and loss of perks at every turn (which may not actually be that significant), but the ubiquitous instruction ‘to speak with your pension provider’ is enough for those who may lack confidence, to put transferring elsewhere into the “too hard” basket.
- More needs to be done to bring the costs and charges out of the shadows. This is no better illustrated by the fact that even the charging structures for workplace pensions – where there is a charge cap – are confusing, opaque, and hard to compare.
- We think Independent Financial Advisers generally do offer value for money. That is why there is a very real need for free or affordable sources of advice, not just guidance, for the large proportion of the population to whom pensions are a remote concept conducted in a foreign language.
Our submission can be read here: Work and Pensions Committee inquiry into pension costs and transparency – LITRG response