NAPF initial response to OFT report: welcome but falls short

The National Association of Pension Funds (NAPF) today (Thursday) gave an initial welcome to the OFT’s final report on the DC pensions landscape but argued that it should have gone further to ensure good outcomes for pension savers.

Joanne Segars, NAPF Chief Executive, said:

“This report is very much needed and we agree with a lot of the analysis.

“The NAPF has been leading the way on promoting transparency in charging so we welcome the report’s recommendation for action. We support its proposals to tackle legacy issues such as high charges but want to be assured that the proposed audit of legacy contract-based schemes will be properly independent. We welcome the recommendation that small trust-based schemes are subject to scrutiny by the Pensions Regulator to ensure they offer value for money, as all pension schemes should be providing value for money, although we wish the OFT had gone further and recommended consolidation and the creation of super trusts.

“We are particularly concerned that the report risks letting down pension savers who need someone solely on their side, with the independence and power to act in their interests, to make sure they get the best outcomes for their retirement savings. We would have preferred a clear direction that employers have a choice – they should either be prepared to provide governance themselves or use a master trust arrangement. The proposal to have governance as part of the provider risks fudging the issue and leading to potential conflicts of interest.

“The report has set the future course with the right long term principles to secure good outcomes for pension savers. But we feel that action is urgently needed now. With automatic enrolment underway we need to get things right now, not further down the line.”  

In conclusion, Ms Segars said: “As always, the devil is in the detail. We now need a period of consultation on the OFT’s recommendations and a clear plan from the Government as to how it would implement them.”