Oral Answers to Questions

David Mowat Excerpts

Monday 1st September 2014 Commons Chamber

[Mr Harper]

She nods to say that she is. We have made inroads into the backlog of claims, and it is worth remembering that ESA claimants will normally be in receipt of benefit while they are waiting for the work capability assessment to be looked at.

[David Mowat (Warrington South) (Con)]

2. What steps he is taking to ensure that employees will not be auto-enrolled into high-cost pension schemes.

[The Minister for Pensions (Steve Webb)]

As part of our strategy to ensure value for money in pension savings, we announced earlier this year that we would protect members of pension schemes used for automatic enrolment by introducing a default fund cap of 0.75% from April 2015. We will shortly publish more details on the implementation of the charges measures.

[David Mowat]

I thank the Pensions Minister for that answer, and I congratulate him on introducing that cap, which is half the level of the one introduced by the previous Government for stakeholder pensions. Over time, our cap will save pensioners £1 billion a year. Can he confirm, for the avoidance of doubt, that the cap will also apply to older, legacy pension schemes, some of which currently charge up to 2% per annum?

[Steve Webb]

I am grateful to my hon. Friend for his supportive comments. Focusing on automatic enrolment, I am pleased to tell him that we aim to protect as many members of automatic enrolment qualifying schemes as possible, regardless of when they started contributing. From April 2015, the cap will therefore apply both to members of schemes newly set up for automatic enrolment and existing qualifying schemes for auto-enrolment.