Commenting on the launch of a Government Consultation on charge capping for auto-enrolment, Adrian Boulding, Legal & General’s Pensions Strategy Director, declared that “in the interest of value for money for consumers, nobody should have to pay more than half a percent for auto-enrolment.”
“0.5% is the benchmark for value, and large schemes have already demonstrated that it’s perfectly achievable. All consumers deserve this level of value, whatever the size of firm they work for. Smaller employers can club together, such as in a master-trust, and harness this level of value for their workforce too”
Legal & General believe that 0.5% is where Government should pitch the price cap, and that it should apply to the default fund that employees are automatically enrolled into. Adrian continued……
“There are plenty of additional services that some people will find worth paying more for. Wider investment choice, financial advice, auto-escalation programmes are all things that members could choose to pay more for. But the basic pension that everybody is defaulted into by their employer should cost no more than half a percent.”
Commenting on how Government could implement this, Adrian suggested:
“There are two ways forward. The Pensions Minister could use his statutory powers to impose a cap
equivalent to 0.5%pa. Or, the Pensions Regulator could let it be known that employers who choose to
auto-enrol people into schemes with higher charges than the State provider NEST levies are exposing
themselves to challenge that they have disadvantaged their staff. The open ended threat of future
regulatory action may be just as effective as a statutory price cap.”
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