Pensions Minister Steve Webb today announced that government plans to cap auto-enrolment pension scheme charges from April 2014 will be postponed by a year.
The move follows a consultation on pensions charges in November last year, during which Which? launched the Hands Off My Pension campaign and called 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.
Pensions charges cap objective remains
Speaking at a CBI pensions conference on Thursday, Steve Webb, the Minister for Pensions, said: ‘Nothing in the response to our consultation has changed our view that action is needed to ensure people are not ripped off by excessive pension charges.
‘Having listened to feedback from our consultation, we have decided that it would be only right and fair to give employers a minimum of 12 months’ notice of the changes that we will announce.
‘We remain committed to delivering value for money for pension savers by tackling high charges in workplace pension schemes. This is particularly important for those workers who are automatically enrolled into a scheme then remain in the default fund.’
Which? responds to pensions charges cap postponement
Responding to Mr Webb’s announcement, Which? executive director, Richard Lloyd, said: ‘Consumers, including the thousands who supported our campaign, will welcome this continued commitment from the Minister to shaking up the pensions market so that it gives people a better deal.
‘The industry must now use the next year to work constructively with the Government to make sure they are ready to implement reforms that give consumers value for money in their workplace pensions.
‘We will continue to argue for the proposed charge cap to be set at 0.5% and for it to cover all new and existing workplace pension schemes. With consumers being squeezed by the cost of living, there is no room for poor value pension schemes in the workplace.’
Pensions charges cap consultation responses considered
There were 166 responses from industry and consumer representatives, including one from Which?, to the Department for Work and Pensions’ consultation on how pension scheme charges should be capped. The department will publish a response to all of those ‘in due course’.