In a bid to improve the pensions of millions, the Government is set to consult on whether the charges paid by employees, who are automatically enrolled into a pension over the next few years, should be capped.
Between 2012 and 2017 all employees over the age of 22 and earning above £9,440 per year, who are not already in a suitable workplace pension, will be automatically enrolled into a pension. Contributions will be made by both the employer and the employee and will reach 8% by 2018, of which a minimum 3% must be paid by the employer.
The Government is clearly concerned charges could cut the value of pensions. Speaking in Parliament earlier this week the Pensions Minister, Steve Webb, said that a consultation will be launched into the benefits of capping charges on workplace pensions at 0.75%.
Mr Webb said: “Tomorrow, we will launch our consultation on a cap on pension charges in workplace schemes. A range of options will be on the table including an outright ban on all charges above 0.75 per cent a year.”
The proposed cap of 0.75% is lower than the 1% proposed by Labour and would apply to both new and existing schemes.
In the same debate, Gregg McClymont, the Shadow Pensions Minister, called for all members of workplace pension to have access to an Annuity broker when they reach retirement.
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