Product providers believe the Treasury's justification for raising the price cap to 1.5 per cent for child trust funds should have been applied to stakeholder pensions and should be introduced across the board for the Sandler range.
The industry is calling for a more consistent approach to charge capping from the Treasury, which says it has set the cap at 1.5 per cent for CTFs because the plans will be very small funds and it wants to encourage a wide range of providers.
But Clerical Medical head of industry affairs Nigel Stammers says this argument could be applied to small company pension schemes and should now be extended across the Sandler range.
The minimum contribution to a CTF will be £10 on top of the Government's initial payment, compared with the £20 one-off minimum payment needed to start a stakeholder pension.
The Treasury says CTFs are not typical of other suite products, including pensions. Its report published this week says the accounts will be smaller in terms of the average size of funds compared with pensions and will have a lower minimum contribution level than other stakeholder products.
Stammers says: “We hope the reasons the Treasury has for justifying 1.5 per cent for CTFs will be applied to pensions but we will have to wait and see. A small fund is a small fund, whether it is labelled a CTF or a pension.”
Scottish Widows marketing director Peter Jordan says: “If this applies to everything for those who have already decided to play in this market the 1.5 per cent makes everything 50 per cent more worthwhile.”