Pensions giant Legal & General has backed calls for a 0.5% cap on workplace pension scheme charges, echoing calls by Which? for a maximum limit on the fees.
Legal & General wants a 0.5% cap to apply to both new auto-enrolment schemes and existing pension schemes.
Pension scheme charges
The Pensions Minister, Steve Webb, has been consulting on pension scheme charges for employees signed up under auto-enrolment, and is considering a ban on all charges above 0.75%.
Mr Webb has said: ‘People need to know they are getting value for money when they save into a pension and are not being ripped off by excessive charges’.
However, Which? believes that proposals for a 0.75% cap don’t go far enough and we launched a ‘Hands Off My Pension‘ campaign at the start of November, calling for the cap to be set at 0.5%. Such a seemingly small reduction could save consumers about £4.8bn over the next 10 years.
The consultation ends today, and we are handing the government a dossier featuring many of the 7,000 comments from the 14,500 people who have so far signed up to the campaign.
Workplace pension charge cap
Which? executive director, Richard Lloyd, said: ‘While we strongly support the direction of the Government’s plans there is an urgent need for better minimum standards for all workplace pensions so people can be confident that they are being enrolled into high quality, good value schemes’.
John Pollock, Legal & General Assurance Society chief executive, said that a 0.75% cap would have little if any positive impact on new workplace schemes, which tended to charge around 0.5% anyway, and would leave people in older schemes paying higher fees.
He said: ‘A pension charge cap at 0.75% is a poor idea by the government. The Office of Fair Trading states typical new auto enrolment schemes actually charge 0.51%.
‘Having a cap at a much higher figure will have no impact on new pension schemes, and will result in legacy savers being treated unfairly compared to new savers.
‘Legal & General is in favour of having a meaningful cap at 0.50%, not only for new auto enrolment schemes, but for legacy pension schemes as well’.
‘Hands Off My Pension’ campaign
To protect people’s retirement funds, Which? launched the Hands Off My Pension campaign calling for the Government to:
- Set the proposed charge cap at 0.5%.
- Roll out the cap to cover all new and existing workplace pensions.
- Ban hikes on annual management charges when switching job.
Support the Hands Off My Pension campaign and share your views.