Could we see a higher charge cap on auto enrolment pensions?
Last year we wrote about how The Department for Work and Pensions (DWP) had set out options for capping charges on auto enrolment pension schemes. These proposals could be pushed back due to Treasury officials lobbying for a higher charge cap.
In October last year the DWP published a paper setting out plans for capping charges on auto enrolment default funds. The cap would cover all relevant charges including administration and contribution fees. The options included a 0.75%, 1% of two tier “comply or explain” cap.
The “comply or explain” cap would give employers access to a 1% charge cap but they would be required to justify to The Pensions Regulator why the scheme was charging over 0.75%.
The DWP has stated it favours a cap of at least as low as 0.75%, but it has been revealed that the Treasury is pushing for a higher cap of 1% as it does not want to be seen as too interventionist.
Pensions Minister Steve Webb had previously stated he wanted to have a cap in place by April, but this new announcement could hold up the process.
In a joint statement, the DWP and Treasury said “This is an important and complex consultation which requires our proper consideration to ensure we get it right, and we will confirm a publication date in due course.”
Have you started getting your organisation ready for auto enrolment yet? The Pensions Regulator is urging businesses to start preparing at least 18 months before your staging date.
Why not book a place on an IRIS Understanding Automatic Enrolment training seminar to find out more about the legislation, as well as the steps you need to take to ensure you are prepared?