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L&G to cap auto-enrol charges as Webb pushes for Govt action on fees

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Legal & General is to cap charges for automatic enrolment pensions schemes at 0.5 per cent for investments in insured funds as reports suggest the Government is likely to introduce a charging limit. 

The cap covers both the annual management charge for administration of the pension and the fund charge for the L&G default investment. An L&G spokesman says the cap will apply to both existing and new pension schemes.

The move comes as reports state the Government is looking to introduce a cap on auto-enrolment charges. A report in the Financial Times says pensions minister Steve Webb is pushing for a 1 per cent cap when savers are auto-enrolled without a choice of scheme. 

L&G chief executive John Pollock says: “We have long been advocates of value for money and have avoided opaque charging structures such as active member discounts. This commitment will give our customers confidence in selecting L&G as their provider for auto-enrolment. 

“Ahead of the Government’s forthcoming consultation on maximum charges for auto-enrolment schemes, we have made our position clear that no employees saving in a workplace pension scheme should have to pay more than half a per cent a year of their retirement savings pot.”

Webb announced in May that the Government intends to consult on capping pension charges for auto-enrolment schemes later this year. 

The Office of Fair Trading is also due to publish a report on the workplace pensions market later this month.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. This is all well and good but might it not also mean the insurers become less and less inclined to quote for smaller schemes as auto enrolment moves down the company size and therefore more and more employers and advisers will be left looking at Nest and seeking some middle-ware solution to help them with that?

  2. As predicted by many on here previously the crunch will come from 2014 when the smaller businesses have to comply and the insurers ,like L&G,will effectively withdraw from the market where firms do not fit their minimum contributions.Clients will then be left with Nest as their only option and unless the employers agree to fees for advice ,some will some will not,they will have to set the schemes up themselves or fall foul of the penalties for failing to set up a scheme correctly or at all. Un intended consequences of an ill conceived (Labour) initiative will cost many employers dearly.Of course we ,the tax payers,will end up paying for yet more regulators to assess who does and does not comply and the IFA sector will no doubt suffer approbation in the press and the corridors of power,yet again.Perhaps this could be one for SJP to pick up seeing as they are so profitable and successful now?

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