Fourteen of the leading pension providers will disclose any pension charges that they levy on people in workplace pension schemes as part of a signed agreement laid down by the Association of British Insurers (ABI).

The agreement will see the likes of Aviva, Axa, Prudential and Zurich Assurance reveal the total pension charges, including exit and entry charges, of schemes newly established for auto-enrolment by summer 2014. All older workplace pension schemes will have an extended implementation deadline of 31 December 2015.

The agreement follows a pledge made last year by the ABI, when an investigation by the Royal Society for the encouragement of Arts, Manufactures and Commerce found pension providers were giving misleading messages about the level of hidden charges associated with a pension plan.

In response, the ABI in conjunction with the Financial Services Authority, the Investment Management Association, the National Association of Pension Funds, The Pensions Regulator and the Department for Work and Pensions have drawn up an agreement that requires pension providers to: disclose the total charges at outset, to a standard definition, across contract and trust-based workplace pension schemes; disclose total charges taken in the previous year; and disclose of the previous year’s investment transaction costs.

The initial group of signatories is drawn from the ABI’s membership but the association will continue to consult on extending it to the broader market of pension provision.

ABI director of life, savings and protection Stephen Gay said: “The agreement demonstrates the industry’s commitment to improving customer understanding in pensions by disclosing all pension charges and costs more clearly and consistently. Automatic enrolment into workplace pensions is bringing millions of people into pension savings for the first time. It is imperative that savers have complete confidence that the industry is open and transparent with them.”

Pensions Minister Steve Webb added: “Charges really matter – small differences can have a big impact on a pension pot over time. Automatic enrolment makes it all the more important that people have access to schemes which offer both transparent and value for money charges. The industry must be ambitious in its timescales for achieving greater transparency.”

The 14 companies who have signed the agreement are: Aegon, Aviva, Axa, B&CE (the People's Pension), Co-operative Insurance, Friends Life, Legal & General, Lloyds Banking Group, LV=, MetLife, Prudential, Royal London/Scottish Life, Standard Life and Zurich Assurance.

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