MPs have called for a new regulator to look after workplace pensions. They argue that existing problems will be worsened by the fact that there are now three regulators overseeing the industry.
In a report published today, MPs on the Work and Pensions Select Committee have also demanded a ban on "damaging" costs that "cause serious consumer detriment".
These include deferred-member charges and member-borne consultancy fees, which can wipe thousands off the value of retirement funds.
Dame Anne Begg, chair of the committee, said: "The plethora of costs and charges that can be applied to pension pots are not only confusing, they can seriously impact on an individual's retirement income. They should be banned."
The MPs said one body should look after workplace pensions. Currently three – the Pensions Regulator, the Financial Conduct Authority (FCA) and Prudential Regulation Authority – are involved.
"The Government should reassess the case for establishing one body with sole responsibility for regulating workplace pensions," Dame Anne said. "It should be invested with sufficient powers to ensure that all members of workplace schemes are given the level and consistency of protection they need."
Tom McPhail, an analyst at Hargreaves Lansdown, said the MPs were right to point out the mess that is the current pension regulation system. "There are far too many regulatory bodies involved in UK pensions and the result is a bit of a mess. The only answer is to roll all of the Pensions Regulator's activities into the FCA and for it to have sole responsibility for all aspects of the pensions system," he said.
The MPs also warned that people are losing out when they buy annuities. They said pension providers are not doing enough to ensure savers are aware they can shop around for the best annuity rate, rather than taking what's offered by their pension firm.
"It should be mandatory for pension providers to supply customers with a comprehensive breakdown of all the annuity rates available to them," Dame Anne said.Reuse content