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Shadow pensions minister calls for trustee governance

Pensions schemes should be governed by trustees to ensure savers get value for money, shadow pensions minister Gregg McClymont has said.

Speaking at the NAPF annual conference in Liverpool, McClymont said the current government is "in the wrong position and not close to getting it right" on the governance of pensions schemes.

He criticised the current concept of independent governance committees, which providers will need to put in place from April 2015, as "unlikely" to lead to value in workplace pensions schemes.

The Department for Work and Pensions (DWP) said independent governance committees will be responsible for ensuring schemes are run in the best interests of their members, but McClymont claimed the need to deliver for shareholders would undermine this.

"Pensions schemes of all kinds should be governed by trustees, with legal obligations towards savers," he said.

McClymont added that having a trustee governance system would address the "fundamental asymmetry in information" in the pensions market.

"You have to put a system in place where someone has a responsibility to look after the interests of the saver," he said.

McClymont also criticised the current government for the "astonishingly thin" information around guaranteed guidance (the advice that all savers will be offered from April 2015).

"It’s striking that so close to implementation date, everyone in the pensions industry is still seeking the most basic clarity around how these reforms are going to work," he said. "We don't know what this guidance will look like or whether the take up will be high enough to drive these changes forward in a positive fashion."

Speaking at the same event, Association of Superannuation Funds of Australia CEO Pauline Vamos warned that the UK must not interpret increased freedom as an invitation to relax regulation.

“When you open up a market and you are not regulating that market you will get dodgy products and bad advice,” she said. “Products must be comparable and transparent, or else it’s a disaster waiting to happen.”