Labour today (Saturday 8th February) sets out new measures to help savers facing a cost-of-living crisis protect the value of their retirement income from being slashed by unfair fees and rip off charges.
An astonishing £1bn is lost each year because savers aren’t getting the best deal when they turn their private pension pot into retirement income. The government’s own figures show savers could be losing £230,000 from their lifetime savings through excessive fees and charges.
A Labour Government would:
- Introduce a requirement for all savers to be referred to an independent broker to make sure they get the best deal when they turn their pension savings into retirement income. The average saver could be £400 a year better off from shopping around for the best deal.
- Force pension providers to reveal the full range of charges and transaction costs that are cutting into savings.
- Cap pension charges to clamp down on ‘rip off’ fees and charges. The Government’s own figures show that individual savers could be losing up to £230,000 in excessive charges.
- Bring in tough new rules to ensure all pension providers must legally put the interests of savers first rather than allowing their savings to be siphoned in profits for pension providers and fund managers.
- Drive through long-term change in the pensions industry to ensure costs keep coming down by making sure that inefficient pension providers with high charges are forced to improve or merge.
The Government has comprehensively failed to tackle the broken pensions market:
- Repeatedly refusing to take action to ensure that all fees and charges are made transparent, rejecting Labour amendments to the pensions bill.
- Failing to introduce a cap on pension fees which has cost savers millions of pounds despite promises by David Cameron.
- Leaving savers alone to navigate their way through the complex pensions market which has led to hundreds of thousands of people not getting the best return on the pension pot they have saved throughout their lives. Every year around £1bn is lost due to savers not being offered the best deal when they convert their pension pot into a retirement income.
Rachel Reeves MP, Shadow Secretary of State for Work and Pensions said:
“Millions of people who are working hard to save for their retirement face losing thousands of pounds because of David Cameron’s failure to fix the broken pensions market. Rip-off pension fees and charges are costing savers thousands of pounds. An astonishing £1billion a year is lost because people aren’t offered the best deal when they approach retirement.
“A Labour government will ensure independent brokers help people turn their hard-earned private pension pots into a secure retirement income, saving thousands of pounds. We will also make sure that savers income is protected from excessive fees and charges.
“Millions of savers facing the cost-of-living crisis are paying the price for the government’s failure to step in and fix the broken pensions market. Labour will protect people’s pension savings from rip-off fees and charges and reward people who save for their retirement.”
ENDS
Notes:
1. Pension fees and charges – savers risk losing up to £230,000. The Department for Work and Pensions’ own estimates suggest that someone who saves throughout their working life could end up losing almost £230,000 from their pot in pension schemes charging fees of 1.5 per cent of savings, Source: DWP (2013) Public consultation Better workplace pensions: a consultation on charging
2. The National Association of Pension Funds and the Pensions Policy Institute have estimated that each year pensioners lose up to £1bn in lifetime income as a result of not shopping around.