LONDON, June 24 (Reuters) - Britain’s Financial Conduct Authority has proposed more detailed rules for checking whether members of workplace pension schemes are getting value for money.
Since 2015 personal pensions at workplaces must be overseen by a so-called independent governance committee (IGC) to check that members of the scheme are not being ripped off.
But the FCA said on Wednesday that its review of how the committees have performed showed a mixed picture’, with some lacking independence and being ineffective in challenging firms.
The watchdog said it has told some committees to make improvements.
“Senior managers are accountable for making sure that appropriate and timely steps are taken to deal with our concerns,” it said.
After the review found a lack of consistency among committees, the watchdog has set out proposals for public consultation for a framework for undertaking the annual value for money check.
It includes a definition of value for money and three key elements to use in assessments: charges and costs; investment performance; and services provided.
IGCs should consider if an alternative pension scheme would be cheaper for members.
The FCA reviewed 14 IGCs that cover over 95% of the market by policyholders and assets under management.
Around 75% of firms in its review had made some reductions in charges for their workplace pension schemes, thought it was not possible to link all the reductions to the work of IGCs.
Between 2017 and 2019 total charges for schemes overseen by IGCs fell by roughly 2 basis points, equivalent to about 33.6 million pounds annually, the FCA said.
Reporting by Huw Jones, editing by Louise Heavens