Pension providers have welcomed news that the Department of Work & Pensions will limit flat fees on smaller pension pots.
Following review of the default charge cap and standardised cost disclosure the DWP will announce annual flat fees will be banned on pots worth £100 or less.
The measure is designed to help low paid employees and those who frequently change jobs and have their pensions divided among a string of different workplace schemes.
In addition, the DWP is starting work on standardising costs and charges so that true price comparison can be made and a real assessment of the value for money invested can be calculated.
Minister for pensions, Guy Opperman says: “No-one should find their hard-earned pension savings eaten away by charges.
“Removing flat fees on pension pots worth less than £100 will boost the pensions of hundreds of thousands of people and help them enjoy the retirement they deserve.
“We will also be introducing pensions dashboards, which will make it easier for savers to track these smaller pension pots and ensure they’re getting the most from their savings.”
Smart Pension director of policy Darren Philp welcomed this decision.
He says: “We welcome the outcome of this consultation which limits the impacts of flat fees on members with the smallest pots.
The introduction of the ‘de minimis’ at £100 is consistent with what we currently have in place for our members and strikes a sensible balance between protecting the member and provider sustainability.”
However he added: “The application of this for active members will need a lot of thought as it could be operationally complex as well as inconsistent with other industry charging practices, and we look forward to picking up on these issues during any consultation on the implementation.”
