The industry has reacted positively to the Financial Conduct Authority’s (FCA) amended rules on disclosing costs and charges to workplace pension scheme members, published today (4 February), though concerns around member understanding persist.

Key amendments to the original proposals centred around illustration requirements, as these will no longer required for all fund options, but will instead be limited to a “representative range of funds/options”.

Hargreaves Lansdown head of policy, Tom McPhail, commented: “Costs and charges have a significant impact on people’s retirement savings... The FCA has come up with a proportionate and well-considered response to this challenge, which should satisfy consumer groups and the industry alike.”

"They have also recognised it would be counter-productive to swamp investors with illustrations for all funds available; instead they require disclosure for default funds plus a representative sample of other funds."

Whilst schemes will be required to set out the costs and charges imposed on scheme members, the report has outlined a phased introduction for the rules, limiting first year reporting to default funds and options.

Hymans Robertson partner, Rona Train, added: “In the short term, providers will only have to publish costs and charges information on default arrangements, rather than full fund ranges.

"With this, the FCA is focusing on the importance of charges to those who (generally) do not make an active decision where to invest their pension assets. This seems logical and will cover the vast majority of members in DC arrangements."

The report also confirmed amends to COBS 19.5, which reflect concerns around member understanding and require IGCs to ensure “information is communicated in a way that considers how members might reasonably use it”.

Interactive Investor personal finance campaigner, Myron Jobson, commented: “Better transparency when it comes to workplace pensions is long overdue – complacency has been the order of the day for far too long."

“Workplace pensions aren’t the easiest products to understand as both the costs and quality aren’t immediately obvious and outcomes may not be apparent for many years down the line, making it difficult to assess value for money.”

Echoing this, McPhail added: “"Clear, simple disclosure from a trusted source is vital if people are to engage with the information and have confidence to act on it."

In an attempt to ease concerns around member disincentivising, the final requirements have also been updated to ensure that scheme governance bodies no longer need to report negative transaction costs.

Train added: “Taking away the need to show negative transaction costs, whilst not showing members the full picture, may actually help with members’ confidence in the disclosures.

“It’s a delicate balance for the FCA of requiring providers to produce the information that’s relevant to the majority of DC members and giving potentially hundreds of pages of information which members will generally find impenetrable.”

However, the amended requirements have not been universally welcomed, as the Association of British Insurers director of regulation, Hugh Savill, stated: “We support measures to improve transparency that helps customers to make more informed choices, but we do not believe these measures will achieve this.

"While we are disappointed with these requirements, which still risk overloading customers with information, we recognise that the FCA has taken onboard some of the industry concerns regarding the volume of data to be published."

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