Occupational Pensions

(asked on 19th July 2017) - View Source

Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what steps he is taking to reduce explicit and implicit costs for workers saving into pensions.


Answered by
Guy Opperman Portrait
Guy Opperman
Parliamentary Under-Secretary (Department for Transport)
This question was answered on 5th September 2017

By 2018, around 10 million people will be saving or saving more into pensions as a result of automatic enrolment. The Government wants to ensure that people who are automatically enrolled are protected from high and unfair charges. This is why in April 2015 we introduced a cap of 0.75% on administration charges for people who are invested in the default fund of schemes used for automatic enrolment. We have also taken steps to cap or ban early exit charges in occupational pension schemes, as these can act as a barrier to individuals wishing to access the pension freedoms. We have also banned member-borne commission charges in workplace pension schemes used for automatic enrolment.

We are currently examining the level of the charge cap to see whether it should change and whether some or all the costs associated with investment transactions should also be covered. The Government expects to conclude its examination by the end of this year.

In 2016, the Department for Work and Pensions and the Financial Conduct Authority (FCA) undertook a joint review on industry progress in reducing charge levels in older, so-called legacy pension schemes. The report published in December 2016 found that over 1 million customers have benefitted, or will soon benefit, from a reduction in costs and charges to 1% or lower. The Government and FCA wrote to these pension providers earlier this year challenging them to make further improvements. The Government is pleased with the progress so far and we and the FCA will continue to work with providers to ensure, wherever possible, that all members of these legacy schemes benefit from reduced charges.

Reticulating Splines