THE pension industry must be more transparent on charges and how pension scheme members’ hard-earned savings are spent, MPs have urged.

The Commons work and pensions committee said it was “unconvinced” that the industry would rise to the challenge of providing clear, transparent information about the costs and charges of investments.

Funds should be obliged to show clearly the costs for both defined contribution and defined benefit schemes, the committee said.

Better scrutiny of value for money in defined benefit schemes will also either justify or avoid the need for the often difficult decisions being taken about the future of those schemes, the MPs argued.

The committee said its previous report on the British Steel pension scheme had found that members were “shamelessly bamboozled” by advisers into signing up to ongoing adviser fees and unsuitable pension products and investments.

“These developments have intensified concerns about the effect of investment management charges, transaction, advisory and other intermediation costs in eroding the value of individuals’ savings,” the committee said.

“These are part of broader concerns that low levels of customer engagement and understanding, coupled with costly and opaque intermediation, risk leading to poor outcomes for pensioners.”

It called on the Department for Work and Pensions to review charging structures next year.

A department spokesman said: “We have taken decisive action to limit charges and make the costs of saving into a pension more transparent.

“We capped charges for millions of people saving through automatic enrolment at 0.75 per cent and we legislated to ensure that all costs are set out to savers alongside their annual statements.”