After a tumultuous but ultimately understated experience in the United States for the long-delayed rollout of retirement plan fee disclosures, the United Kingdom will be following suit this year.
Reuters reports that private pension companies in the U.K. will also be forced to reveal the investment and operating fees and the costs to employee retirement savings, all part of an agreement created by the Association of British Insurers.
The industry organization, which represents pension and insurance organizations among some of the U.K.’s largest pension plans, has received support for the plan from major companies including Aviva and Prudential.
As has been the case in the United States, U.K. pension and retirement investment plans have been accused of failing to reveal some of the hidden costs related to participants’ investments.
In the U.K., the average annual management charge placed on a workplace-sponsored pension plan is approximately 0.77 percent, according to the ABI.
Mounting pressure from both government and community watchdogs prompted the ABI to draft the fee disclosure plan, working in association with state retirement authorities including the Pensions Regulator, the Department for Work and Pensions, the National Association of Pension Funds and the U.K. Financial Services Authority.
The new plan will be set in motion in 2014 for auto-enrollment pension plans and in 2015 for all other workplace pension and retirement systems.
The plans will now have to explain all entry and exit charges, as well as the total costs and charges to participants for managing the plan and its investments.
The U.K.’s new auto-enrollment system is backed by the federal government and is expected to draw between 6 million and 10 million new participants in coming years.