Parliamentary Question addressed to the Minister for Social Protection

To ask the Minister for Social Protection in view of the Report on Pension Charges in Ireland 2012, if she plans to correct the considerable variation in the range of charges being imposed on consumers, especially smaller occupational pension schemes and individual pension arrangements; and if she will make a statement on the matter?

 

To ask the Minister for Social Protection in view of the recommendation of the Report on Pension Charges in Ireland 2012, if approaches are being developed to improve consumer, employer and trustee awareness and knowledge of pension charges; and if she will make a statement on the matter?

 

Questions taken together

 

The Report on Pension Charges 2012 was undertaken by my Department, working with the Central Bank and the Pensions Board, and with support from PWC. The primary objective of the report was to gather information on the level of pension charges levied, to assess whether these charges are reasonable and transparent, to report on the findings and to make recommendations. The report highlights a wide range of issues in relation to pension charges and identifies that there are major challenges to be addressed in the two main areas of reasonableness and transparency of charges.  

 

With our ageing population and with people living longer, planning and saving for retirement is more important than ever.   A key part of this is to know what level of pension you are likely to receive in retirement and for employers, trustees and scheme members to understand the very significant impact pension charges can have on your final pension fund. The report shows that small percentages can add up to big reductions in a pension fund over time.

 

The launch of the Report on Pension Charges report was followed by a three month consultation with stakeholders. There was a broad range of views expressed in the submissions received as well as a range of suggestions and proposals aimed at improving various aspects of the pension charging environment. Following the consultation period, it was agreed by Government in April 2013 that the recommendations contained in the report will be implemented, and this work has commenced. 

 

A Pension Charges Working Group is in place to initiate actions that follow up on the recommendations of the report. This group comprises the Department of Social Protection, the Pensions Board and the Central Bank.   Each has a core role to play in delivering on the recommendations contained within the Report on Pension Charges and work has commenced in this regard. Joint action undertaken by the group has and will include consultation with other stakeholders as appropriate.  

 

I have also previously signalled a change to the governance structure of the Pensions Board which will be restructured. Under the new structure, a separate unpaid Pensions Council, with a number of members representing consumer interests, will advise on matters of pensions policy. The first task I will be giving the new Council is to monitor the implementation of the recommendations in the Report on Pension Charges and advise me if further actions are needed. Should this prove necessary, a further policy and regulatory response may be brought to Government.