There are 'dark corners' of the investment and pensions industry, says Pensions Minister

The DWP and the FCA have joined forces to investigate transaction charges in occupational pension schemes

Pension Minister Steve Webb (Getty Images)

There are "dark corners" in the world of occupational pension schemes, the Pensions Minister said this morning.

Steve Webb said: "There is a fear that the dark corners of the investment and pensions industry hold some nasty surprises."

The Department for Work and Pensions and the Financial Conduct Authority have joined forces to investigate transaction charges in occupational pension schemes as the fund industry faces growing criticism for lack of transparency about charges.

A 0.75 per cent cap on the charges on workplace pension comes into effect next month but doesn’t include transaction costs.

"We have a duty to throw light for the first time on potential hidden charges - and restore faith and fairness in British pensions," Mr Webb said.

Christopher Woolard, director of strategy and competition at the FCA said: "Transaction costs and charges associated with workplace pension schemes have a direct impact on the value of people’s pension pots."

Announcing the call or evidence this morning, the City Watchdog raised the possibility that fund groups may have to conform to forthcoming regulations and rules on transaction cost disclosure which only applies directly to pension providers and trustees.

"Trustees and IGCs of workplace pension schemes need to have clear and transparent information as part of assessing value for money offered by pension schemes. We want clarity and consistency across the market and that is why we are asking for views on how costs and charges information should be disclosed," Mr Woolard said.

Previously announced changes to workplace pensions disclosure will require scheme trustees and independent governance committees to report annually on the costs involved in managing pension pots.

The call for evidence follows the publication last month of a discussion paper on transaction costs by the Investment Association. The FCA and DWP are asking for comments to reach them by 4 May 2015.