Photograph by Ken Teegardin/Senior Living
MPs have proposed a 0.75% cap on fees charged by pension schemes in a move to boost retirement funds of many across the UK.
The government are due to release a consultation paper on Thursday where they propose a cap of 0.75 – 1% on fees on the estimated £275 billion currently managed in workplace pensions.
Currently, the average fees for new pension schemes is 0.51%, but the Office of Fair Trading estimates that more than 1% is charged on more than 186,000 pension pots worth £2.65 billion.
Speaking on the proposals, 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.
This proposal brings the cap below the 1% limit proposed by Labour, but the National Association of Pension Funds have described the limit as a “blunt tool” that would inhibit innovation in the sector.
