Capping Pension fees,,,

Bishop’s Stortford’s IFAs at Enable are keen to make sure people are aware of the management fees they pay for their pensions. With the onset of auto enrolment meaning that over the next five years, all workers aged between 22 and state retirement age who earn at least 9,440 pounds a year will be enrolled into a private pension scheme selected by their employer, unless they are already in a scheme or they opt out.

The average annual fee for these schemes is 0.51% of assets under management, but more than 150,000 people are in schemes where the fees exceed 1%, the government said. "Enough is enough on charges. People need to know they are getting value for money when they save into a pension and not being ripped off," pensions minister Steve Webb said.

Among the options are blanket fee caps of 0.75%or 1%, and allowing fees above 0.75% only when an employer seeks a special exemption, he said. Reducing an annual fee from 1.5% to 0.75% would give someone who saved 100 pounds a month for 46 years an extra 100,000 pounds at retirement.

The Association of British Insurers reacted cautiously saying it was worried that a formal cap might encourage some pension funds to raise charges up to that level. Other experts expressed concern that the campaign for lower charges deflected attention from a push to improve the overall quality of pension provisions and may lead to a proliferation of "basic" products which failed to meet the needs of savers. "A charge cap only looks at what people are paying and not at what they are getting for their money ... At Enable our IFAs will happily address what you are getting for your money in  your pension pot.

Issued by: Enable Independent Financial Life Planners
25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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