Oral Answers to Questions

David Mowat Excerpts

Monday 25th June 2012 Commons Chamber

[Mr Duncan Smith]

I accept the hon. Lady’s point and will look at the situation carefully to ensure that that does not happen. I will say that when we came into office food banks were not allowed to put their literature in jobcentres; the previous Government did not allow that and did not want them anywhere near jobcentres. We have since allowed them to put their literature in jobcentres. Jobcentre advisers are also telling people about that, so some of that expansion is due to the fact that people did not even know about this before we told them about it, which I think is fairly reasonable.

[David Mowat (Warrington South) (Con)]

Given the increasing evidence of market failure in the private pensions system and the Financial Services Authority’s recent estimate that between 30 % and 50% of private pension pots now go on charges, will the Government consider putting a cap on charges before auto-enrolment comes in?

[Steve Webb]

I am pleased to say that the early evidence from auto-enrolment—firms are already choosing schemes —is that average charge levels are coming down very dramatically, compared with the stakeholder charge caps that used to be in force, for example, with a norm of around 0.5% for last firms, which is radically below the levels we have seen in the market in the past. However, we need to keep this under review and have reserve powers to cap charges if we think they are becoming a problem as auto-enrolment is rolled out.