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Govt proposes cap on pension scheme charges

Govt proposes cap on pension scheme charges

Category: Pensions

Updated: 31/10/2013
First Published: 31/10/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Government is proposing new reforms that could see pension schemes face a cap on how much they can charge their members.

These proposals form part of a Department for Work and Pensions consultation into the pensions industry, which pensions minister Steve Webb called a "full frontal assault" on pension charges.

This follows an Office of Fair Trading (OFT) report released in September that found widespread evidence of schemes offering poor value for money to millions of pension savers, with the Government saying that the aim of its consultation is to investigate whether the industry can be relied upon to address the issues identified by the OFT or whether it would be necessary for it to "intervene in some way to protect people from being enrolled into schemes which have high charges".

Currently, some older schemes charge up to 2.3% a year in management fees, but the Government wants these fees to be capped at between 0.75% and 1%.

Speaking to the BBC yesterday, Mr Webb said: "We do have powers to cap a much wider range of charges. The document today looks at banning something called active member discounts. That means when you leave a firm they jack your charges up - we don't think this is right so we will probably ban those."

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