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Mixed response to UK pension charge limit
28 March 2014
Defined contribution charge capped at 0.75%
The UK Government has announced that the defined contribution
charge cap will be implemented at 0.75% from April 2015. This
only applies to the default investment option being used for
auto-enrolment schemes, but is expected to become the benchmark
for DC schemes generally.
"We welcome this announcement and the focus on value for money,
member outcomes and the importance of fee transparency," said
Neil Walton, head of the UK institutional business development
group at Schroders.
"The new rules make sure all the costs in pension schemes are
published and the government will then consider whether these
should also be included in the new charge cap. This
transparency is important to ensure an effectively functioning
However, Neil Carberry, director for employment and skills at
employers' group CBI said capping fees at this level was
unwise, especially as schemes will have to provide advice to
every member following changes announced in the UK Budget.
"It is also disappointing to see that the government has
decided to ban active member discounts, which means
long-serving staff will no longer be rewarded."
Gina Miller, founder of SCM Private and the True and Fair
Campaign stated that if the UK government is to get an 'iron
grip on pension charges' it requires more than a 0.75% cap on
annual management fees for auto-enrolment schemes.
"All transaction costs and hidden fees need to be included if
savers are to finally get transparency on what they are paying
to save into a pension. For two years the True & Fair
Campaign has been calling for the pension and investment
management industry to disclose 100% of all costs, including
hidden costs and fees. Yet Steve Webb today reminded us that
the OFT has found as many as 18 different charges are levied by
pension providers which remain 'hidden or complex'."
"While the government's commitment to end this rip-off and
include hidden costs and fees within a pensions cap is welcome,
waiting until 2017 to include transaction costs and other fees