Following the introduction of automatic enrolment (AE) in 2012, 10 million workers are estimated to be newly saving or saving more by 2018. Workplace pensions: update of analysis on automatic enrolment 2016 estimated that this will result in an additional £17 billion per year being saved into workplace pensions by 2019/20.
To improve the value for money of defined contribution (DC) workplace pension schemes used for AE, in March 2014 the Department for Work and Pensions (DWP) announced a comprehensive range of charges measures in schemes used for AE (qualifying schemes). These included:
- a 0.75% charge cap on default arrangements in DC workplace schemes (with effect from April 2015)
- a ban on consultancy charges in DC contract-based schemes (April 2015)
- a ban on Active Member Discounts in DC workplace schemes (April 2016)
- a ban on member-borne commission related payments in DC workplace schemes (April 2016)
We commissioned this report to measure charges applied across qualifying and non-qualifying DC workplace pension schemes open to new members. Respondents provided data for a reporting date on or after all the charges measures had been introduced on 1 April 2016.
The Pension charges survey 2015 provided the baseline data used in the 2016 research. Previous surveys in the series, using a different methodology, were conducted in 2011 and 2013.
The research findings will be used to:
- measure the impact of the charges measures by comparing charges prior to their implementation (April 2015), to charges in the period after they had been fully implemented (April 2016)
- inform the 2017 government examination of the level and coverage of the charge cap
Authors: Andrew Wood, Peggy Young, Christoph Körbitz, Chloé Ramambason (Breaking Blue, formerly Bright Blue).