Time to end private pension rip-offs - Labour's call for 'Pensions people can trust'

16 July 2012

Liam ByrneLabour’s Shadow Work and Pensions Secretary, Liam Byrne, and Shadow Pensions Minister Gregg McClymont, are today publishing "Pensions people can trust" as Labour sets out its ambition to end private pension rip offs and create the world's best private pension system for British pensioners.

The Policy Review document, developed over months of consultation, sets out Labour's new policy agenda highlighted by Ed Miliband, who talked about taking on private pensions rip-offs at this week Press Gallery Lunch, and just months ahead of the October launch of the ‘auto-enrolment’ system which will see an extra 10 million automatically brought in to private pension schemes in the coming years.

Labour legislated for the new system of private pensions for all with cross party support following the Turner Report. The new "something for something" pensions see workers' contributions equally matched by government and employers.

Releasing the document Labour’s Shadow Work and Pensions Secretary, Liam Byrne said,

“Labour is determined to be the party of hard-working savers. That's why I'm saying very clearly today that I want to see the best private pensions system, working for people who do the right thing and save for the long term.

"Right now, a worst case scenario could see a pensions saver lose up to half of their pension thanks to hidden costs and charges. That's wrong and it shouldn't be allowed.

"We all know we need to save more for the future. That means we need a system that builds your pensions pot, not eats your pension pot.

"We've got some great pensions companies in Britain. But with an extra 10 million about to be brought into private pensions we're determined to make sure savers are served by every pensions company playing to the standards of the best."

Gregg McClymont MP, Labour’s shadow Pension’s Minister added:Gregg McClymont

“We’ve set out where we think the current system does not work for pension savers. The government should deal with these issues as a matter of urgency. In the coming months we’ll be talking to people up and down the country to see how we can get this right, because with the introduction of auto-enrolment just round the corner, we’ve got to get this right.”

The Policy Review document

* Spells out the costs and charges savers can face, and the problems in the system - hidden charges, rip-offs in the annuities market, and penalty charges for people who change jobs and exit charges for savers switching schemes.

* Looks to the Australian system where the implementation of the Cooper Review is set to create a simpler and more cost effective system from 2013 by opening up the scheme to new levels of transparency

* Addresses the root causes of the problem from – lack of simplicity, transparency, accountability, scale and restrictions placed on the low cost high quality national not for profit Trust - NEST

* Includes comments from across the industry including representatives of; The Pensions Specialist, The True and Fair Campaign, The Saga Group, First Actuarial and Hargreaves Lansdown PLC, as well as Lord McFall, the former Chair of the Workplace Retirement Income Commission.

Click here to download Labour's Policy Review document - "Pensions People Can Trust"