Pensions - Articles - Capita comments on pensions charge cap

 Steve Webb, minister of state for pensions, today announced the introduction of a charge cap of 0.75% on auto-enrolment workplace pension schemes. The charge cap will come into effect from April 2015.

 Gary Smith, head of DC consulting at Capita Employee Benefits, commented: “We welcome the cap in principle as it’s important that people can have faith that pension schemes do not apply excessive charges, especially in light of smaller employers reaching their auto-enrolment staging date.

 “Larger employers currently tend to enjoy a much lower charge than this - an average of a little over half a percent[i]. So, the 0.75% charge cap may mean that it becomes a ‘target’ for pension providers to work toward as opposed to a maximum threshold that should not be exceeded.

 “Given the recent announcement that those approaching retirement will receive guidance - under the ‘guidance guarantee’- and, as the delivery of this guidance will be either from the trust or the provider, it may be that larger employers see their charges rise to accommodate the cost of this new duty.”