Government to crackdown on Pension Charges

The fees’ currently imposed on pensions will be capped, the governments has promised under new proposals.  In addition, the governments announced its intentions to ban companies from imposing “consultancy charges” on its employees who would be joining auto-enrolment schemes.

Currently, advice can be given to firms about pensions by financial companies but employers can pass on the cost to its staff which campaigners believe can result in as much as 50pc being taken off the first year’s savings.

The pension’s minister, Steve Webb, has also outlined a proposal to impose a cap fund on defined contributions pensions, the schemes where the income is dependent on returns from the stock market and the fees imposed.

1Webb explained: “With millions of people taking up pensions savings for the first time under automatic enrolment, we have to give people confidence that they will get good value for money.”

The ban was followed by a six-month review on consultancy charges which found that fees could be negatively disproportionate on people who regularly move jobs and enter new schemes regularly, the review found. Webb added that “We will act promptly and vigorously later this year in the light of their findings.”

The current consultancy fee ban comes as the Department for Work and Pensions published the Pensions Bill, which also includes previously announced measures to also introduce regular reviews of the state pension age as well as bring forward the increase in state pension’s age to 67 to 2026-28.

Earlier this year the Office of Fair Trading had announced that it would be investigating workplace pensions to ensure that the market was functioning properly, fairly and costs were kept down.