Government bans consultancy charges and looks at capping DC pension fees
10 May 2013
The National Association of Pension Funds (NAPF) reacted to a Government announcement today on pension charges.
On banning consultancy charges in automatic enrolment pension schemes, Joanne Segars, Chief Executive, NAPF, said:
"Excessive consultancy charges can be a serious problem and we are concerned about them, but a blanket ban is too simplistic.
“Employers should not be allowed to pass on charges for advice that does not directly benefit the saver, such as guidance on complying with auto-enrolment laws.
“But sometimes savers can benefit from the advice that comes with these charges. They may find that their pension is better governed and that they get stronger communications about their savings.”
On announcing a consultation on capping default fund charges in defined contribution pensions, Ms Segars said:
“Charges have been a big concern for some time. People have to be able to save without worrying whether their savings are being unfairly eaten away. So the Government is right to be looking into this.
“Capping charges altogether is one option, but to really ensure that savers get the most bang for their buck, the Government should take more radical steps to change the structure of the pension market.
“Part of the problem is that there are too many small pension schemes. While some small schemes are very well-run, many find it difficult to secure low costs. Larger schemes can drive charges down through economies of scale and deliver better value for money.
“The industry has done a lot to reduce charges and make them more transparent, though there is still work to be done. An industry-wide charges code has recently been launched. And the Pension Quality Mark, a benchmark that recognises good pensions, has toughened its own charges cap.”
Notes to editors:
1. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Paul Platt, Head of Media and PR, NAPF, 020 7601 1717 or 07917 506 683, [email protected]