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Axe for 0.3% NPSS charge

Government set to relent to give product providers key role in admin of a national pension savings scheme

The Government is expected scrap the 0.3 per cent national pension savings scheme charge and allow pension providers to play a key role in the admin of an NPSS-style system in the White Paper on pension reform.

The Government is expected to propose that consumers should be able to choose personal accounts from a limited number of pension providers, broadly in line with the Association of British Insurers’ version of the NPSS.

Reports say that it will propose the creation of a central Government-controlled organisation to oversee admin of the scheme, as suggested by Lord Turner in the second report from the Pensions Commission.

The White Paper also appears to have ditched Turner’s 0.3 per cent annual management charge, focusing instead on a charge of 0.5 per cent in line with current stakeholder charges.

The ABI says the White Paper, due for release on Thursday, is only a preliminary report and will be followed by a paper in the autumn focusing on more technical details of the NPSS.

Standard Life head of pensions policy John Lawson and others in the industry are lobbying the Government to seriously consider alternative charging structures such as a dual-charging structure or a regular monthly admin fee on top of an annual management charge.

Legal & General pensions strategy director Adrian Boulding says: “This is a good opening shot for further consultation. We have moved away from the daft 0.3 per cent debate which has proved to be a bit of a red herring. Now the Government needs to move away from a single charge to a dual-charge structure.”

Hargreaves Lansdown head of pensions research Tom McPhail says: “We have got to remember that we still do not have the definitive strategy and the important debate about means-testing still has not been resolved. We must be careful not to be seduced by the political agenda.”

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