Pension charges will be capped at 0.75% per year from April 2015, the Department for Work and Pensions has confirmed.
Under the plans first announced in March 2014, the cap will be on all charges to manage and invest the default funds of defined contribution (DC) schemes.
Under the proposals:
- a 0.75% charge cap will be introduced on DC pension scheme charges
- this will cover all charges apart from transaction costs
- the cap will be reviewed in 2017
- unfair costs and hidden charges will also be banned
- from April 2016, savers in all types of scheme will not be charged commission or consultancy fees.
Pensions Minister Steve Webb said:
“We are taking strong action to restore confidence in pensions by capping charges, banning hidden costs and putting new standards in place to ensure everyone saving in workplace pensions gets the best possible value for money.
“With millions of people now saving through automatic enrolment, we want to give them confidence that their hard-earned money is working for them and not disappearing in opaque charging structures and ending up lining the pockets of the pensions industry.”