Retirement
New pension charge calculator launches
A calculator to help bosses work out how much their employees are paying in workplace pension charges has been launched by the Association of British Insurers (ABI).
The calculator is hosted on The Pensions Advisory Service (TPAS) website. It allows employers to input pension charges – including active member discounts and initial charges – to get a simple analysis on the overall impact charges will have on their workers’ retirement saving.
It has been backed by pensions minister Steve Webb and the National Association of Pension Funds.
Hargreaves Lansdown head of pensions research Tom McPhail said: “Employers need all the help they can get in making good decisions on behalf of their employees. This tool will make it easier for them to analyse the impact of charges and to compare different pension schemes.
“Hopefully it will reduce the risk of employees being enrolled into unsuitable schemes. It is also important to note the other key factors determining pension pay outs, including how much is paid in, how long the employee saves for, where their money is invested and how they draw their retirement income.”
Example of the charges a member might pay: Age 35, retiring at 66, contributing for 5 years, reducing the annual charge from 1% on the pension to 0.6% would be to reduce the percentage of the fund deducted in charges from 13.2% to 8.2%.
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Other ongoing pension work includes a Department for Work and Pensions consultation on minimum standards for auto-enrolment schemes, the Office of Fair Trading investigation into pension charges and The Pensions Regulator’s guidance on auto-enrolment compliance.