Government consultation proposes to cap annual charges that are applied to pension schemes at between 0.75% and 1.0% a year.
While the average charge on new pension schemes is around 0.51% the Office of Fair Trading estimates that there are over 186,000 pension pots with £2.65bn assets that are subject to an annual charge of above 1%.
The government is also consulting on measures to increase transparency in the pensions sector and make it easier for employers to compare pension schemes.
Minister for Pensions Steve Webb said:
‘The government believes that enough is enough on charges. People need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges. We are consulting on a cap on pension charges. A range of options will be on the table including an outright ban on all charges above 0.75% per year.’
With Pensions Auto Enrolment being rolled out to all employers please do get in touch if we can help you to get to grips with the obligations.