The Government has extended its power to cap pension charges to include deferred members as pensions minister Steve Webb looks to clamp down on active member discounts.
Under current rules the DWP only has the power to cap pension charges for active scheme members.
In a ministerial statement outlining amendments to the Pensions Bill, Webb (pictured) says: “The [amendment] extends an existing reserve power to cap charges for deferred members, which would enable Government to protect all scheme members from high charges, not just active members.”
Some of the UK’s biggest pension providers, including Aegon, Aviva, Scottish Widows and Standard Life, offer active member discounts, which allow pension schemes to operate a two-tier charging structure for active and deferred members.
Webb has previously described active member discounts as “deferred member penalties”.