Oral Answers to Questions

David Mowat Excerpts
Monday 5th November 2012

(12 years, 10 months ago)

Commons Chamber
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David Mowat Portrait David Mowat (Warrington South) (Con)
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14. What recent discussions he has had on the auto-enrolment charging regime for employees.

Steve Webb Portrait The Minister of State, Department for Work and Pensions (Steve Webb)
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It is vital that people are enrolled in schemes that offer transparent and value-for-money charges. The National Employment Savings Trust’s low charge structure has set a benchmark, prompting several competitive alternatives in the market, and I have called for providers to guarantee not to enrol people into high-cost legacy schemes.

David Mowat Portrait David Mowat
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The Minister will be aware of the recent Cass business school report that says that many older defined-contribution schemes charge 3% or more. That is six times the best practice of newer schemes, and it is costing many tens of thousands of people the chance of having a decent pension. Will he act to ensure that people cannot be auto-enrolled into those schemes—by using either a kitemark or a charges cap?

Steve Webb Portrait Steve Webb
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On the sort of legacy schemes that my hon. Friend refers to, I am pleased to announce that, only today, another provider—Fidelity—has said that fees in its default funds will not exceed 1% and that existing scheme members will have the opportunity to switch out of their current funds. That follows Aviva’s statements that its schemes will have a charge of not more than 1%. It will not allow auto-enrolment into any older-style schemes. I encourage other firms to follow suit.