Price cap on pensions charges shelved until April 2015
Webb (pictured) had originally planned to implement a cap on charges for default funds used for automatic enrolment in April.
However, speaking at the Confederation of British Industry (CBI) Pensions Conference, Webb said the implementation of the cap had been pushed back to April 2015 to avoid disrupting auto-enrolment, the government’s pension savings scheme.
The minister said: “Nothing…has changed our view that action is needed to ensure people are not ripped off by excessive pension charges.
“Having listened to feedback from our consultation, we have decided that it would be only right and fair to give employers a minimum of 12 months’ notice of the changes that we will announce.”
Pension provider Aegon backed the delay. The firm had previously warned the government not to act rashly on auto-enrolment scheme charges, saying an outright cap may harm auto-enrolment.
Managing director of workplace pension solutions Angela Seymour Jackson commented on the delay: “It will allow employers and providers to get on with enrolling many thousands of employees into workplace schemes, often for the first time.
“Rushing new scheme conditions through at this critical stage would have disrupted many employers’ plans to use good existing schemes. The pensions minister’s decision will avoid employees losing out on valuable contributions while employers made alternative arrangements.”
However, Gina Miller, founder of the True & Fair Campaign, which calls for transparent fund charges, called the delay “shameful”.
She said: “We need a full frontal assault on the UK’s rip-off pensions with legislation that forces full transparency, with all costs stated in full, via one uniform number.
“Currently the proposed cap merely focuses on the annual fee, which is often a fraction of the full cost that pension companies pickpocket from savers’ retirement funds.
“It is shameful that pension companies have successfully lobbied to have caps on charges kicked down the road for a year.
“I would urge the Government to use this pause to strengthen the proposals so that any caps include all costs and fees.”