Pensions - Articles - Cap on workplace pension charges

 The Department for Work and Pensions (DWP) is expected to publish a consultation tomorrow (Wednesday 30th October) outlining plans to cap workplace pension charges at 0.75% a year.

 Peter McDonald, pensions partner at PwC, commented:

 “Introducing a cap on pension charges is a step forward but it is vital that 0.75% is used as the maximum amount that can be charged, rather than the default option. Many schemes, particularly master trusts and those for larger employers, should be able to charge less due to economies of scale. Competition should also help drive down charges.

 “It is important to remember that member value is not just about the charge, but also what the member gets for that. Good investment management, member communication and education are just as important to ensure people are getting the most value from their pensions.

 “Capping pension charges introduces a completely new dynamic to pensions in the UK. Governments and regulators now have the ability to name and shame pension schemes that charge too much, meaning employers’ own brands could be on the line if the pension scheme they offer their employees is not up to scratch.”