OFT "concerns" over workplace pensions The Office of Fair Trading (OFT) has identified a number of key concerns about the way the workplace pensions market operates. Since January this year the OFT has been examining workplace defined contribution (DC) schemes to assess whether competition between providers is working in the best interests of savers. In a progress update on its study, issued on Thursday, the OFT said from the evidence it had gathered so far, it "has some concerns about the way that certain parts of the sector function." It is to hold meetings with government, regulators and the insurance industry. Its concerns included the level of governance over the performance of some schemes which it said "may not be sufficient" to ensure that scheme members get the best possible investment outcomes. It identified two-tier charging structures - which see some members in deferred schemes hit with higher fees than active members - and adviser/consultancy fees as two area of concern. It also cited the difficulty of comparing charges between providers. "Over the next month we will be holding discussions about these concerns with the industry, the government and regulators," said the OFT in a statement. The purpose of these discussions will be to discuss the scope and scale of our concerns, and to consider what action, if any, might be appropriate to address them. Discussions of possible future actions will also consider the relevance of current or existing initiatives undertaken by regulators or the industry. There are currently about 4m people saving into workplace defined contribution or money purchase schemes. However, these numbers are expected to swell to 8m by 2018, as all employers in the UK are required to enrol eligible staff automatically into a workplace pension. The OFT said it is focusing on defined contribution schemes because the size of an employee's pension is determined by charges and investment performance as well as the contributions they make. In Thursday's update, the OFT also raised concerns over the fact that some schemes would not become big enough to deliver value for members. It said that there was some schemes - primarily but not exclusively those sold before 2001 - which had charges that may not represent value for money. Responding to the OFT's update, Labour called on the government to accept its proposed amendments to the pensions bill, currently before parliament, which include full transparency on costs and charges and improved governance. "Labour's proposals would give the government power to prevent rip-offs and ensure everyone could save into a pension scheme they could trust," said Gregg McClymont, Labour's shadow pensions minister. Without our amendments the bill is only half a reform. The government has already put in place plans to ban "consultancy charging" or adviser fees on pension schemes used for automatic enrolment. Last week, it issued a call for evidence on how work-based schemes are managed, with a view to setting standards to protect members.