Pensions - Articles - FCA and Government crackdown on older workplace pensions


A government and FCA crackdown on excessive costs has lowered charges on £24 billion worth of assets for members of older workplace pension schemes.

 The saving over the past 4 years means high charges levied on members of older workplace, or legacy, pension schemes, are soon expected to be a thing of the past.

 A report published by an Independent Project Board, commissioned to investigate high charges, found that £25.8 billion of assets in defined contribution workplace pension schemes were potentially exposed to charges of more than 1%, failing to give savers value for money. This has now been reduced by over 90%.

 Since 2013, the government and the Financial Conduct Authority (FCA) have worked closely with these pension providers to bring their legacy schemes in line with the standards of new workplace pension schemes introduced since the launch of automatic enrolment.

 Guy Opperman, Minister for Pensions and Financial Inclusion, said: No one that saves into a pension scheme should have concerns that their savings are at risk of being eroded by excessive charges.

 That’s why we are tipping the balance back in favour of consumers, who will now see their schemes delivering better value and increasing their income in retirement.

 By working closely with regulators and providers, we are committed to getting consumers the best possible deal.

 The Independent Project Board found that these pension schemes, which are contract and trust-based and not covered by the government’s pension charge cap on workplace pension schemes used for automatic enrolment, were charging excessive amounts for annual administrative charges, without justifying the extra costs.

 Of the £25.8 billion of assets covering 1.5 million pension pots, between £5.6 billion and £8 billion was potentially exposed to charges above 2%, and nearly £1 billion to charges above 3%, with the latter often members with small pension pots worth less than £10,000.

 The government and FCA continue to work with the small number of remaining providers to eliminate high costs and charges by the end of 2018, and has been clear that it will legislate, if necessary.

 This is the next step government is taking to ensure savers receive good value for money from their pension, that their pension will meet their needs for retirement, and that savers are better able to maximise savings.

 Read today’s FCA update on reducing pension fund costs and charges
 DWP and FCA published the most recent legacy audit report Poor value workplace pension schemes: a review in December 2016.

Back to Index


Similar News to this Story

Rising female State Pension Age led to higher employment
Between 2010 and 2018 the female state pension age (SPA) increased from 60 to 65. This has increased employment among affected women over 60, althou
PASA launches latest round of GMP guidance
The Pensions Administration Standards Association (PASA), the independent body dedicated to driving up standards in pensions administration, today ann
TPR and the FCA publish joint pensions strategy
The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have today launched a joint regulatory strategy aimed at strengthening their re

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.