Ed Miliband has fired an opening salvo on pension charges, ahead of the publication of a policy paper on Monday as the Government again delays publication of the state pension white paper.

Here’s what Ed Milliband got right and wrong. Right – He’s right to argue in favour of greater transparency on pension charges (and investments generally). It should be cheaper and simpler to move out of old high charging pension contracts into newer, better plans. However if we get the transparency right and the transfers work better then we’re less likely to need to intervene on prices. The ABI should perhaps be going back to its members to look at a voluntary agreement to eliminate excessive exit penalties on old pensions.

Wrong – He’s wrong to focus on the level of charges and he’s certainly wrong to talk in terms of charges of four percent or five percent resulting in people losing half their investment. The vast majority of millions of people being auto-enrolled into pensions in the coming years will be going into schemes with annual charges of less than one percent. At this level, the impact of charges and the variation between them is minimal and of less significance than other factors. For a really good independent analysis, see the PPI research here. This focus on charges relates to pension plans that are now years out of date.

Labour tried regulating pension charges in 2001 with Stakeholder. It was a flop because they failed to understand that making something cheap isn’t the same as making something that people want. The risk of grandstanding on ‘rip off’ pensions is that people will be deterred from saving for retirement. He’s wrong to put the cart before the horse. We believe that the government should have a more coherent savings policy based on encouraging long term saving. Rather than focus on the narrow issue of pension charges, policymakers should clearly articulate what their savings policy objectives are and then work on how to achieve them. This was reflected in the National Audit Office report on the Pensions Regulator this week.