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Industry-wide pensions group publishes code to help employers make the right decisions

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A new Code of Conduct on the charges made on workplace pensions could help employers choose the best pension for their staff, a wide-ranging group hassaid.

The group is developing an industry-wide Code which will ensure all charges on defined contribution pensions are clearly and accurately stated in writing before an employer picks a pension scheme.

The new Code could help employers who are new to pensions to secure the best deal when they start complying with rules to automatically enrol their staff into a pension.

The group, which was formed by the National Association of Pension Funds (NAPF), launched a public consultation seeking views on the parameters of the Code. Feedback will help generate the final Code of Conduct, to be launched in late summer.

There are currently big gaps in regulation and practice, which make it difficult for employers to compare charges between pension schemes and to assess value for money.

Joanne Segars, chief executive of the NAPF, said: "We need to boost faith in pensions, but charges are a big concern for many people and often the information on offer is unclear. People need to see what is being charged and why, and in a language they understand. This Code could really flush out the detail on charges by making sure that the fine print gets magnified.

"Auto-enrolment is just around the corner and many businesses will be looking at pensions for the first time. This Code will help employers make the right pension choice for their staff. Greater clarity will make it much more likely people will stick with their new workplace pension if their employer has banked them the best deal possible."

The working group that launched the consultation is made up of employer representatives, pension industry leaders, union and consumer groups, major employers, and pension providers.

Steve Gay, director of life, savings and protection at the ABI (Association of British Insurers), added: "We are a nation of under-savers and this must change. We must do more to help people understand the importance of financial planning to secure a decent income in later life. Making pension charges more transparent is a building block in helping customers make the right decisions about their future.

"Employers choosing a pension for the first time need support and guidance to understand the impact of charges on their employees' pension pots, especially where they don't have professional advice. A Code could help to achieve this. This consultation will help us test the practicability of the proposals with our members and employers."

Current regulation requires contract-based defined contribution pension schemes to offer information to members about charges, but the same requirements do not apply at the point employers pick pension schemes for their employees.

The working group members are: Accenture, Association of British Insurers (ABI), B&CE, Confederation of British Industry (CBI), Federation of Small Businesses (FSB), Heineken, Investment Management Association (IMA), Legal and General, National Association of Pension Funds (NAPF), National Employment Savings Trust (NEST), NOW:Pensions, Trades Union Congress (TUC), Which?, Whitbread.