Government confirms 0.75% cap on pension charges – PwC comments

Published at 15:08 PM on 27 March 2014

The Government has today confirmed that a 0.75% cap on charges will apply for anyone automatically enrolled into a workplace pension from April 2015.

Philip Smith, director in PwC’s defined contribution pensions team, said:

“Introducing a cap on pension charges and abolishing active member discounts is another important step towards simpler and more transparent pension schemes and should go a long way to help rebuild trust in pensions as a long-term savings tool. These changes, combined with those announced in the Budget, give the pensions industry and employers the opportunity to reinvigorate the pensions market and deliver better value for their members.

“The introduction of provider level Independent Governance Committees will help to protect contract-based members, but many employers will operate their own governance committee to critically examine the service and quality of delivery for their own particular circumstances and employees. These, combined with stronger requirements on trust-based schemes, will improve accountability and ensure better quality for all pension scheme members.

“The charge cap does not include hidden transaction expenses, which can often form a significant part of the overall cost to the member. It is vital that the Independent Governance Committees and trustees get absolute clarity on these costs and disclose them to employers and members in a meaningful way.

“With employers enrolling employees into workplace pensions it is important that the cost of complying with the legislation does not ultimately fall to pension scheme members. The ban on commission is an important step in giving employees confidence that their workplace pension is delivering the best value.”


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