Workplace pension saving schemes will disclose fees and charges upfront from 2014.
The UK's largest pension providers have today promised to disclose the full costs to employees in workplace pension schemes. The members of the Association of British Insurers, including Aviva (LSE: AV.L - news) , Prudential (LSE: PRU.L - news) and Standard Life have pledged to clearly and consistently reveal the pension charges to savers in the future.
The move comes after much consumer pressure on the industry to disclose the full extent of charges to pension savers.
The agreement will be implemented by the summer of 2014 for the new auto-enrolment workplace pension scheme and by December 31, 2015 for all other established pension schemes.
The ABI will set-out universal guidelines on how the charges should be worded for scheme members in the first half of 2013.
Steve Webb, Minister for Pensions, MP said: "This is a welcome step in helping customers make decisions about their long-term savings and I hope to see providers across the industry signing up to this agreement.
"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 agreement comes two weeks after the implementation of the Retail Distribution Review , which is designed to make the costs associated with money management more transparent, with a focus on standardising financial advice.
"Pensions offer investors a secure, low cost and tax efficient way to save for retirement. This demonstrates how far the pensions industry has come in taking a responsible and transparent approach to managing investors’ retirement savings," he said. "The pensions industry is now actually setting standards ahead of the financial regulators."
Pension providers who have signed up to the agreement are:
B&CE (The People's Pension)
Royal London / Scottish Life
Zurich Assurance Ltd