Carey Pensions has launched an automatic enrolment pension scheme with a total default fund charge of 1.05 per cent – 30 basis points higher than the 0.75 per cent cap due to be implemented in less than a year’s time.
The Islamic Bank of Britain issued a press release this morning announcing it had accredited a new Sharia-compliant auto-enrolment scheme called ‘The Islamic Pensions Trust’.
The IBB said the scheme had been developed in conjunction with Carey Pensions “to address the need for a Sharia-compliant pension scheme to meet the criteria for automatic enrolment, as defined by the Government”.
However, an IBB spokesman confirms the scheme charges members 0.8 per cent for asset management and 0.25 per cent for administration. Under proposals to be implemented in April next year, any scheme with a default fund charge above 0.75 per cent will be outlawed for auto-enrolment.
Hargreaves Lansdown head of pensions research Tom McPhail says: “This may be Sharia-compliant but it doesn’t meet the DWP’s standards.
“Why would an employer select a scheme now that doesn’t meet the Government’s requirements? No employer is going to want to start afresh with a new scheme that doesn’t meet requirements coming into force in April next year.”
The IBB spokesman says: “A solution to meet the cap for the default fund is in progress and should be available by the end of the year.”