The government has proposed plans for pension schemes to disclose costs and charges made to members for investing their pensions.

According to a consultation launched by the Department for Work and Pensions, for the first time, pension schemes will be compelled to publish fees they charge members, and will give savers the option to access information about where their money is invested.

Schemes will also be required to publish an illustration of the effect of the costs and charges affecting their pension savings and provide information, if asked by a member about the funds that their money is invested in, the consultation stated.

The proposal is the government’s most recent attempt to ensure savers are able to obtain good value for money from their pension and that they are able to reach their retirement income goals. If the proposal is passed, up to 10 million people could benefit from this, the DWP noted.

By publishing scheme costs, trustees and others in the sector will be able to compare value for money and will encourage greater pricing competition to achieve better outcomes.

Failure to provide this information, however, could result in a penalty for occupational pension scheme trustees of up to £50,000 from April 2018.

The announcement follows the recent Pension Charges Survey 2016, that found 98 per cent of eligible members are at or below the 0.75 per cent cap introduced by the government. It also highlighted the lack of transparency of costs in pension schemes and so an annual benefit statement detailing these fees has been proposed.

Work and Pensions Secretary of State David Gauke explained: “The government is beginning to address a fundamental imbalance that exists in the pensions industry.”

“For too long savers have been in the dark about where their pension is invested, what they are paying for, and why they are paying it.” With the new proposal the Secretary of State said he hopes that members will gain a greater sense of “personal ownership” over their pension savings and insert more transparency in the industry," Gauke added.

“By giving people the tools to better understand their options and compare value for money, I believe we are creating a generation of smarter, more informed savers.”

Commenting on the proposal, Royal London director of policy Steve Webb added: “Well run schemes should have nothing to fear from greater transparency on costs and charges. Trustees and governance committees will welcome additional information which will help them to ensure that their members’ money is invested in a way which delivers maximum value-for-money.”

The Financial Conduct Authority will consult on similar rules for workplace personal pensions next year.

The DWP is seeking responses from members of occupation pension schemes, employers, consumer groups, pension providers including third-party administrators, investment managers, IFAs and adviser firms, trustees, scheme managers as well as interested members of the public.

The consultation is open for six weeks, closing on 6 December 2017.

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