In this paper we outline proposed new rules for a charge cap for default funds used for automatic enrolment in workplace pension schemes and for banning certain charging practices.
The automatic enrolment of employees into workplace pension schemes began in July 2012. By 2018, it is estimated that between eight and nine million people will be newly saving, or saving more, in a workplace pension scheme. Many of these will be on low incomes and will not have made any active choice about how their pension savings are invested.
Why are we publishing this paper?
Automatic enrolment means that it is even more important to ensure that workplace pension schemes deliver the best possible value for money. We have been working with the Department for Work and Pensions (DWP) and the Pensions Regulator (TPR) to design measures that will help to ensure that all workplace pension schemes are high quality and offer value for money.
These measures include:
- new governance standards
- a proposed charge cap on default funds
- the banning of certain charging practices
- measures to improve the disclosure of costs and charges
In this paper we outline proposed new rules for a charge cap for default funds used for automatic enrolment in workplace pension schemes and for banning certain charging practices. The intention is to protect members from high charges and paying for advisory services that they do not need, or that are provided to their employer.
Who will this interest?
This paper will interest:
- firms operating workplace personal pension schemes
- other firms or groups that operate group pension schemes that are no longer being actively marketed to employers
- employers and their advisers in relation to the selection and ongoing monitoring of workplace personal pension schemes
- fund managers and other third parties providing services to firms operating workplace personal pension schemes
- consumers who are members of workplace personal pension schemes
- consumer groups seeking better value for money for consumers
Please send us any comments you have on the new rules by 31 December 2014, using the online response form or the address on page two of the paper. We intend to publish the rules in a Policy Statement in February 2015.
Our proposed rules for the charge cap and other provisions, if made following consultation, will come into force on 6 April 2015. Firms will be expected to comply from that date.