Labour leader Ed Miliband will today set out plans to consult on capping fees and charges on pension drawdown products.
The announcement of the proposal comes after Labour first floated a cap in November last year as part of a party-backed independent review of the retirement income market.
In a speech in Redcar later today, Miliband will say: “We will act to protect savings by capping rip-off fees and charges on new pension products coming on the market now so that when people draw money out of their hard-earned pension pot, they have similar protections as they do when they put money in.”
While Labour says it supports the incoming pension freedoms, it has expressed fears that savers could be hit by charges affecting their pension savings.
Labour says it will begin consulting on the charge cap proposal immediately, although it is not clear whether details on the level of the cap or how it would be applied will be published ahead of the May general election.
In particular, the party will seek input from stakeholders over products bought from a saver’s own pension provider.
Research from Which? published earlier today found that a typical pension pot of £36,000 with drawdown of £2,000 a year could be worth £10,300 more with a cap of 0.5 per cent, rather than charges of 2.75 per cent.
Similarly, the consumer body found that a 0.75 per cent cap would mean £8,800 more for a saver.
Meanwhile, Q4 stats from the Association of British Insurers show that drawdown sales have doubled year-on-year, while new annuity business plummeted 64 per cent.