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.