Consultancy charges to be axed for worker pension pots
The government is stepping in to tackle inappropriate charges in automatic enrolment pension schemes.
The Department for Work & Pensions (DWP) announced on 10 May that it would ban consultancy charges in such schemes.
At present, firms can provide advice to their employers but take the fees for this from employees’ pension pots.
But over the last six months, the government has reviewed consultancy charges, and concluded that existing measures to prevent advisers deducting high charges from members’ pension pots were inadequate.
It also found that the charges can have a disproportionately negative impact on people who move jobs regularly.
Minister for Pensions Steve Webb said: “With millions of people taking up pension saving for the first time under automatic enrolment, we have to give people confidence that they will get good value for money.
“That is why we are banning consultancy charges, where scheme members end up paying for advice given to their employer. In addition, the Office of Fair Trading is investigating the whole workplace pensions market and we will act promptly and vigorously later this year in the light of their findings.”
The ban will apply both to occupational and personal pension schemes, and the government intends to lay regulations to implement the ban before Parliament as soon as possible.