Master trust provider Now: Pensions has responded to criticism from MPs about its charging structure in a letter published yesterday.
Earlier in the month Labour MP Steve McCabe who sits on the work and pensions select committee criticised how Now: Pensions charges members.
Now: Pensions charges members £1.5 per month for an administration fee and 0.3 per cent for an annual management charge.
During an evidence session McCabe alleged the way Now: Pensions structures fees for members is unfair and erodes the savings of some customers.
In a letter responding to McCabe, Now: Pensions director of policy Adrian Boulding says when the provider entered the market in 2011 it spent a lot of time considering how to structure member charges so that they are simple, transparent and fair.
Boulding points out most pension providers charge a flat annual management charge based on percentage of the fund but Now: Pensions took the decision to combine a low investment charge with a pounds and pence monthly administration charge.
He adds: “By structuring the charge in this way, we believe it is clear to members how much they are paying for investment management and how much for scheme administration and communication. It also means that those with larger pension pots aren’t overly subsidising those with smaller pots.”
Last week investment management specialist Cardano Group announced a deal to acquire 100 per cent of Now: Pensions from Danish pension fund, Arbejdsmarkedets Tillaegspension.
The acquisition is expected to be completed later this year following Now: Pensions’ authorisation by The Pensions Regulator as part of its ongoing master trust authorisation process.
A report from TPR at the beginning of February said the long running administrative bungle at the provider – where thousands of members did not have contributions invested – has been resolved.