Miliband says pension charges ‘next chapter’ in fight with financial sector
Industry criticises Miliband's claims against pension administration charges as "misinformed"
LABOUR LEADER Ed Miliband has vowed to tackle high pension charges and floated the idea of a 0.5% charge benchmark, in the latest instalment of his campaign against the financial sector, Accountancy Age’s sister publication Professional Pensions reports.
Speaking at a lunch for parliamentary journalists, Miliband said: “There are real issues in the pension industry, because – in parts of the industry – people can see half the money they have paid in being taken in fees and charges and all of that.
“In some parts of the industry people are facing not 0.5%, which is the benchmark administration fee that we put forward in the government scheme when we were in government, but 4% or 5%.”
The Association of British Insurers was quick to criticise Miliband’s stance on charges as “misinformed”.
Director-general Otto Thoresen said: “It is absolutely wrong for Ed Miliband to imply that a 4% or 5% pension charge is normal.
“Pension charges have been falling steadily for the last decade and are continuing to fall. In newly set up automatic enrolment schemes, the average annual management charge of our members is 0.52%. The average annual management charge for existing schemes is 0.77%. For many other existing schemes, both large and small, charges can be lower than 0.3%.
“Nobody in the pension industry would defend a charge of 5% for a standard new pension and we ask Ed Miliband to write to us with details of the schemes that he is referring to. This type of misinformed attack does not reflect the considerable progress the industry has already made.”
The comments from the Labour leader came after the National Association of Pension Funds published its proposed code of conduct for communicating charges with savers, gaining a mixed reception from the industry (PP Online 12 July).