The code enables, for the first time, the consistent disclosure of charges and investment costs across the workplace pensions landscape.
It specifies that all charges are clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges levied and the corresponding services.
The Code also says that employers must be able to see examples of how different levels of charges and charging structures could affect the pension pots of their employees, either through a document or a dedicated web tool.
A working group made up of trade, consumer and industry organisations and pension providers has developed it.
The National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), in association with the Investment Management Association (IMA) and the Society of Pension Consultants (SPC), endorse the code.
It is intended to apply to all parties providing services to employers in setting up and administering pension schemes for auto-enrolment, including insurance companies, trust-based pension schemes, financial advisers, and any other professionals offering paid advice.
Joanne Segars, chief executive of the NAPF, said: "Auto-enrolment will help get millions of workers saving for their old age, but it will only truly succeed if people join a pension that offers good value for money, and if they then stick with it. Charges are a big concern for many people, and this code will help put a spotlight on the fine print.
"Employers need to be able to see more clearly what is being charged and why. They will then be more likely to pick the best pension for their staff. The code sets out a template for explaining charges that will make it easier to compare the cost of pension A with pension B."
Morten Nilsson, CEO at Now Pensions, said: "We are delighted that the NAPF initiated the charges code of conduct and have been working closely with them on the working group to ensure a good outcome. We welcome the introduction of the code and will be following it."
Nilsson added: "The impact of charges is significant, as shown by the recent Caveat Venditor report by the Pensions Institute. If employers are to be able to select a scheme, which will provide their employees with an adequate pension, they need clear, comprehensive, and comparable information on charges, as set out by the code, to enable them to make an informed decision.
"Having clarified costs the next important issue is whether the investment solution and risk management is appropriate and can deliver decent returns," he said.
Jamie Fiveash, director of customer solutions at pensions advisory firm B&CE, said: "B&CE fully supports the new code that begins to ensure consistency of disclosure and communication of charges, to aid employers with comparison and increase consumer confidence in pensions. The timing is crucial with auto-enrolment now underway.
While further work is required in certain areas, we believe the code signifies the first in an important step of collaborative working across the industry for the greater good of consumers and pensions in general."
The code will come into effect in two stages. The first stage begins on 1 January 2013 when the code should be used as a guide for best practice. The second stage starts one month after the launch of the dedicated web tool, which is expected to be available from 1 April 2013 and is being produced by the ABI. During this stage all the provisions of the code will apply.
