The Government should intervene over pension charges on schemes where people are auto-enrolled if they have annual management charges of more than 1.5 per cent, according to shadow pensions minister Rachel Reeves.
Speaking to Money Marketing at the Labour Party conference last week, she said high AMCs significantly reduce the size of pension pots and could undermine the success of auto-enrolment.
She says that the maximum charges should be in line with the cap on stakeholder pensions, which is currently 1.5 per cent but is due to fall to 1 per cent in 2014, two years after auto-enrolment comes in.
Reeves (pictured) said: “If significant charges are placed on these schemes, the Government should intervene. For auto-enrolment to work, we need trust in the system and a belief the products will deliver.”
Speaking at a fringe meeting, National Association of Pension Funds chief executive Joanne Segars said: “This is an issue we cannot dodge if around half of personal and stakeholder pension schemes are charging more than 1 per cent.”
Speaking at a Confederation of British Industry conference last week, pensions minister Steve Webb said the Government is considering capping pension charges on default auto-enrolment funds.