Webb told Parliamentt that over the next decade his charge cap reforms will transfer £200m from the profits of the pensions industry to the pockets of savers.
Webb said: “This government will be the first to get an iron grip on pension charges. We are going to put charges in a vice and we are going to tighten the pressure year after year. There were those who suggested we might wimp out on these choices, that we might give in to the vested interests of the pensions industry.
“I can tell the House that of the three options, we have gone with the toughest of the three, with a 0.75 per cent charge cap for the default funds of qualifying schemes with an equivalent charge for cap for schemes with combination charge structures. The cap will apply from April 2015 and will apply for all schemes used for automatic enrolment.
“From April 2016 schemes will be prohibited from taking money from people’s pension schemes to pay for sales commission. And schemes will have to end the practice of increasing the charges of people who are no longer employed by the sponsor of the scheme, so-called active member discounts, or more accurately, deferred member charges.
“In addition, in 2017 we will consider whether the base charge cap of 0.75 per cent itself needs to be reduced further.”