0.75% charge cap to remain on auto enrolment pension schemes
20 November 2017
Government has confirmed that the cap that applies to member-borne charges in default investment funds within defined contribution pension schemes used for automatic enrolment, will remain at the current percentage of 0.75.
In a written statement, Guy Opperman, the parliamentary under secretary of state for pensions and financial inclusion, confirmed the decision saying that after seeking a range of industry and consumer views and considering the findings of the recent Pension Charges Survey, which captures data from providers covering 14.4 million scheme members, “we do not feel that now is the right time to change the level or scope of the cap.”
Opperman’s statement continues, “the cap is working broadly as intended, helping to drive down member-borne costs, whilst allowing flexibility to allow asset diversity or tailored services for members and employers…The government remains committed to ensuring AE members are protected from unreasonable and unfair charges, and recognises that there is on-going concern amongst consumers.”
According to Opperman government will actively monitor the situation which will also inform the next review. In 2020 there is the intension to examine the level and scope of the charge cap, as well as permitted charging structures, to see whether a change is needed to protect members.
The statement concludes that, “whilst we are not pre-judging the decision, we expect there to be a much clearer case for change in 2020.”
The full written statement is available on the UK Parliament’s website.