View more on these topics

Govt under pressure to delay pension charge cap reforms

Insurers call for three-year transition to minimise disruption to automatic enrolment.

The Government is coming under pressure from insurers to delay introducing a charge cap for existing pension schemes for three years due to concerns it will disrupt automatic enrolment.

Last month, the Department for Work and Pensions revealed three options for capping charges on auto-enrolment default funds.

The DWP is consulting on a charge cap of 1 per cent, 0.75 per cent or a two-tier “comply or explain” cap.

It has proposed introducing the cap in April next year for all employers staging from April 2014 onwards, before extending it to employers who staged between October 2012 and March 2014 by April 2015.

Money Marketing understands officials have held talks with industry representatives about possible transition arrangements over the past two weeks.

Aegon regulatory strategy director Steven Cameron says existing schemes should be given up to three years from their auto-enrolment staging date to comply with the cap.

He says: “A transitional period is absolutely essential, given the industry capacity to review schemes and put in place new schemes if necessary.

“If we rush this some individuals may be moved to a scheme which is worse than their existing arrangement.”

Scottish Life managing director Ewan Smith says: “Price capping should only be used as a policy option when everything else has failed because of the potential unintended consequences.

“We should implement recommendations by the Office of Fair Trading in full but agree a timescale to do that. We think that three years would be appropriate for the industry to get its house in order.”

Apfa director general Chris Hannant says DWP proposals to remove adviser commission from schemes used for auto-enrolment are “wrong-headed”.

He says: “If the Government is concerned about what scheme members pay then the annual management charge is the way to tackle that.”

Click here for all our news and views about the Government’s charge cap proposals 


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm