A proposed cap on pension charges, which would have saved workers millions of pounds has been delayed for at least a year, according to reports this morning.
Over the next few years millions of workers are set to be automatically enrolled into workplace pensions. To protect workers from high fees and improve the income available to them in retirement, a cap on charges, to be introduced in April, had been proposed.
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Delay on pension charges cap
However, despite support from Steve Webb, the Pensions Minister, it has been reported in the Financial Times that the Government has decided to delay the introduction of a cap until April 2015, at the earliest.
A cap of 0.75% per year had been suggested and despite opposition from the pension industry, many experts believed it would be introduced, certainly for new workplace pensions, from April 2014.
However, it now seems that the Government will begin a consultation process, looking at pension charges, as well as a wider range of other issues.
‘Rip-off’ pension charges
Responding to the news, Greg McClymont, Labour’s Shadow Pensions Minister, said: “Labour called for a cap on pension charges last year, but regrettably the Government failed to act and now they seem to be in full scale retreat.”
He continued: “The Government must explain why they are kicking ‘rip-off’ pension charges into the long grass.”
Whilst pension providers will breathe a sigh of relief that such a significant change has been delayed, it is certainly a blow to Steve Webb and pension savers alike, who will continue to see charges eat away at their pension pot.
