Defined contribution (DC) pension providers have made “significant progress” in the UK at reducing costs and charges, the financial regulator said.
The Financial Conduct Authority (FCA) said that as a result of changes called for after a damning report on the DC sector in 2013, over a million customers within these schemes were subject to lower charges than before.
The FCA and Department for Work and Pensions set up the Independent Project Board to deal with DC charges after the Office of Fair Trading’s 2013 market study found that £30 billion (€36 billion) of savers’ funds in DC workplace pensions were at risk of delivering poor value for money.
But 16% of the assets under management in contract-based schemes, and 15% in trust-based schemes, were making unsatisfactory or unclear progress, with customers still at risk of high costs and charges, said the FCA, which added it would shortly contact the providers for an explanation.
Andrew Bailey chief executive at the FCA, said: “We have seen good progress towards the goals that the IPB laid out but this is not the end of the story.
“There is still more to do so we will be contacting the providers who have not yet taken satisfactory actions to remedy poor value schemes and we expect them to act swiftly to ensure good value for customers.”
In November Funds Europe reported on suspicion among millennials for DC charges.
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