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Why the charge cap does not fit

Is the end of the 1 per cent world nigh? There are signs of a Government rethink, so maybe. There are strong arguments that personal pension charges were too high in the past.

Stakeholder has helped cure that com-plaint but the medicine risks finishing off the patient. The charge cap may be too low for the private sector to make a proper fist of selling stakeholder. It piles an unacceptable risk on providers&#39 members, policyholders and shareholders, marrying high start-up costs to highly susceptible future profits.

A price cap for the less well off may have been justifiable but stakeholder changed course, effectively price-capping the whole pension market. This newspaper believes a wide-spread adoption of the 1 per cent world without a lengthy transition period to trail or fee-based sales could prove disastrous for providers, intermediaries and savers.

Price competition in the pension market is in everyone&#39s interest. This should be maintained but any review should factor in reasonable room for advice.

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