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Age UK: Govt must ‘grasp the nettle’ on legacy pension charges

Age UK wants the Government to “grasp the nettle” on pension charges by bringing legacy pension schemes under the proposed charge cap.

The Department for Work and Pensions is currently considering proposals to cap auto-enrolment charges and set a range of minimum quality standards for qualifying schemes.

The DWP has proposed three possible charge caps – 0.75 per cent, 1 per cent or a two-tier “comply or explain” cap.

Speaking at a Nest event in London last week, Age UK public policy programme manager Barbara Limon urged policymakers to shift their focus to people saving in older pension schemes.

She said: “The Government needs to grasp the nettle on legacy schemes and ultimately we want to see legacy schemes brought under minimum quality standards and the charge cap.

“Trust in financial services is already very low and when consumers see stories about pensions being a rip-off they do not distinguish between old-style schemes and new schemes.”

Limon also wants to see the Government introduce minimum standards for annuity purchase.

She said: “I cannot think of a financial product other than annuities where if you make a poor choice it is completely and utterly irreversible.

“We need to increase confidence in savings and people need to be confident they are getting value for money.

“We want to see more quality standards around purchasing an annuity to ensure consumers are better protected.”

Labour shadow pensions minister Gregg McClymont has previously tabled amendments to the Pensions Bill that would require all pension schemes to either refer members to an annuity broking service or offer one themselves.

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