DWP unlikely to cap pension scheme charges

The Department of Work and Pensions (DWP) seems unlikely to heed Lord John McFall's recommendation to cap pension charges for auto-enrolment.

Earlier this week McFall led the Workplace Retirement Income Commission as they urged the Government to discourage opt-outs and ensure pension savers get "good value for money" by capping scheme charges at 1.5 per cent. However the DWP suggested that most workplace scheme charges are already low, and would need to keep their charges low to compete with NEST. Although the DWP will monitor the situation as auto-enrolment gets underway, it seems unlikely that it will set any limits before studying public behaviour post October 2012.

The industry has also raised concerns that capping pension charges could discourage product innovation in the interest of the consumer.

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