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The Code specifies that all charges are clearly and accurately stated in writing, and that employers receive a standard template summarising the pension charges levied and the corresponding services. The Code also says that employers must be able to see examples of how different levels of charges and charging structures could affect the pension pots of their employees, either through a document or a dedicated web tool.
It is endorsed by the National Association of Pension Funds (NAPF) and the Association of British Insurers (ABI), in association with the Investment Management Association (IMA) and the Society of Pension Consultants (SPC). These organisations encourage their members and other participants in the pensions market to follow the practices set out by the Code.
It is intended to apply to all parties providing services to employers in setting up and administering pension schemes for auto-enrolment, including insurance companies, trust-based pension schemes, financial advisers, and any other professionals offering paid advice.
The Code will come into effect in two stages. The first stage begins on 1 January 2013, when the Code should be used as a guide for best practice. The second stage starts one month after the launch of the dedicated web tool, which is expected to be available from 1 April 2013 and is being produced by the ABI. During this stage, all the provisions of the Code will apply.
Joanne Segars, Chief Executive of the NAPF, said: “Employers need to be able to see more clearly what is being charged and why. They will then be more likely to pick the best pension for their staff. The code sets out a template for explaining charges that will make it easier to compare the cost of pension A with pension B.”
Steve Gay, Director of Life, Savings & Protection at the ABI, said: “The aim of auto-enrolment is to create a retirement saving habit amongst millions of consumers, so it is extremely important that we raise confidence in pensions through transparency and value for money".