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Cap on workplace pension charges announced

Workplace pension scheme charges will be capped at 0.75%, Pensions Minister Steve Webb announced yesterday.

The changes will transfer around £200 million pension industry profits to savers' pockets over the next 10 years, Mr Webb claimed, as he vowed to "put charges in a vice" and tighten the pressure each year.

The cap will start in April 2015 and will apply to employer schemes people are automatically put in by their workplace, MPs heard. Mr Webb has previously explained that a 0.75% cap aims to protect people who do not take too much of an interest in their pension.

In a statement to the Commons yesterday, Mr Webb claimed that the coalition would be the first Government to get an "iron grip" on pension charges.

He told MPs: "We're going to put charges in a vice and we will tighten the pressure year after year."

Turning to a cap on scheme charges, Mr Webb said: "Over the next 10 years the new charge cap will transfer around £200 million from the profits of the pensions industry to the pockets of savers."

Shadow minister Gregg McClymont said: "The Government has belatedly accepted that the market in pensions, as in energy, is not working for consumers.

"We welcome this historic change of Conservative and Liberal heart - it is a retreat from free market dogma."

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