This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The government is urging people to take part in a consultation on workplace pension charges before it closes on 28 November.
The consultation so far has received support from consumer and trade organisations alike but the government wants to make sure that those who pay into pensions get their chance to put forward their views.
By 2018 up to 11 million people will be eligible to be automatically placed into a pension by their employer and those schemes should give savers good value for money. The consultation looks at options for a cap on pension charges. Even small differences in the annual management charge can lead to a significant change in retirement pot.
Minister for Pensions Steve Webb said:
We need to make sure that people can be confident that their hard earned savings are not being whittled away by unreasonably high charges. Our proposals for capping charges and increasing transparency are aimed at making the system fairer.
It is in everybody’s interest that we get this right so I am asking people to get involved in our consultation.
Options for the cap include a:
higher charge cap of 1% of funds under management
lower charge cap of 0.75% of funds under management
two-tier ‘comply or explain’ cap – a standard cap of 0.75% of funds under management for all qualifying schemes and a higher cap of 1% available to employers who report to the Pensions Regulator why the scheme charges in excess of 0.75%