Shadow pensions minister Gregg McClymont told delegates at the NAPF conference today that compulsion was “not off the political radar,” if opt out rates were higher than expected.
“We have to see the opt out rates are before looking at compulsion again,” he said. He urged the coalition government to press for lower and more transparent pension charges, great scale for pension schemes through super trusts and better member protection through the use of qualified independent trustees.
He said that without greater economies of scale, UK pension schemes could not achieve the lower pension costs prevalent in the Netherlands, where there are far fewer schemes compared to the UK.
The Shadow Minister said full pension charges should be disclosed because AMCs only accounted for around a third of overall costs. Savers did not currently understand the costs of their pensions which should be stated in pounds and pence, as proposed by the NAPF, so that employers, savers and trustees could see the true costs.
The DWP and the government had been slow to recognise the threat of high charges in the auto enrolment regime and accused the government of not making it clear how a pensions cap would work in practice. “The danger of high charges, if not sorted by the time SMEs are auto-enrolled , is that they will put the new regime in jeopardy,” he said.