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Moves to cut 'rip-off' pension charges

THE Government's "full frontal assault" on pension scheme charges will result in savers collecting more money when they retire, the Pensions Minister insisted.

Steve Webb said more than 99p of every £1 would go into the pension pots of people automatically signed up to a workplace pension under proposed reforms.

Mr Webb said employees currently enrolled to a workplace pension were likely to have the scheme chosen for them by their employer, which could leave them paying low-sounding charges but ultimately lose them a significant cash sum in the long term.

He explained if a person saved £100 a month and a 1% pension scheme charge was applied, it could accumulate to more than £160,000 coming out of their pension during their working life.

But Government plans that go out for consultation today will call for a 0.75% charge cap on workplace pension schemes.

The minister also criticised Labour's proposed 1% cap as not tough enough.

Speaking during the report stage of the Pensions Bill, the LibDem told MPs: "This is a full frontal assault on pension scheme charges.

"We're looking at legacy schemes, charge caps, charges issues that previous governments have simply dabbled with, we are taking effective action."

Shadow pensions minister Gregg McClymont claimed Mr Webb and the Department for Work and Pensions did not actually know what charges and costs were levied in the pensions sector.

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