The Work and Pensions Committee has called on the government to compel all pension schemes to show how they are providing value for money, as it is 'unconvinced' the industry can rise to the challenge itself.

In a strongly worded statement, the committee said it was 'unconvinced' that the industry would voluntarily rise to the challenge of providing clear, transparent information to pension schemes about the costs and charges of investments.

Instead, it said regulators should be given the power to compel pension schemes to demonstrate a value for money measure, which could be compared across the industry and which is accessible to the scheme members.

Committee chair, Frank Field MP, said: “The select committee is calling on the government to shine the searchlights into that part of the financial industry that has settled down to misinforming, mischarging, overcharging and making a fat living off the hard-earned savings of pensioners,” he said. “Ripping off pension savers could be eliminated.”

Field added that better scrutiny of value for money in defined benefit schemes will either justify or avoid the need for the often difficult decisions being taken about the future of those schemes.

Alongside a measure of value for money, the committee called for the FCA to explore the creation of a public register of asset managers’ record of compliance with reasonable data requests. It described asset managers as being unwilling to disclose all the explicit and implicit costs attached to each investment.

The committee said it found that some trustees are making investment decisions when they did not know the true scale of the costs that they were incurring.

The committee also made recommendations on the charge cap for defined contribution schemes, pension scams, the pension dashboard, tax relief and financial advice. On the charge cap it noted that while average charges lay between 0.38 and 0.54 per cent depending on the scheme type, not all charges are covered by the cap. It called for a review of the charge cap, permitted charging structures and to revisit measures to proactively consolidate smaller pots.

Furthermore, the committee noted that the FCA’s dedicated scams team only consisted of approximately 10 people, out of 3,700 staff and that a review of whether this was sufficient should be made.

The committee said a non-commercial pensions dashboard will be a welcome, if overdue, additional tool to provide transparency to individuals and help them plan how they use their pension funds. It called for the government to publish a timetable, by the end of this year, for the rollout of a non-commercial pensions dashboard.

It called on the government to urgently resolve the discrepancy between ‘net pay’ and ‘relief at source’ tax relief that, over a lifetime of pension saving, will make a significant difference to many people and a represent a significant proportion of their pension savings built up through automatic enrolment.

In addition, the committee called on the FCA to 0.75 per cent charge cap for the investment pathways as well as a “robust monitoring programme” for the effectiveness of the investment pathways, including value for money comparisons with other available products.

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