Government considering total ban on auto enrolment commission charges
The Department for Work and Pensions (DWP) has announced it is considering banning all commission charges in auto enrolment pension scheme in an effort to protect savers from increasing charges.
This announcement came as part of a consultation released by the DWP outlining proposals to cap charges for auto enrolment default funds.
In the proposal the DWP set out three different charge caps for auto enrolment funds – 1%, 0.75% or a two tier “comply or explain” cap.
Under the “comply or explain” cap, employers would have access to a 1% charge cap but would need to justify why the scheme charged over 0.75% to The Pensions Regulator.
The release went on to ask for views on whether commission should be banned in all auto enrolment qualifying pension schemes, stating: “We are interested in receiving views on whether commission should be banned and any evidence on the potential impacts of this measure.”
Auto enrolment is highly complex, so one of the first steps you should be taking is educating yourself on the change, as well as what you need to do to prepare. If you are still confused about auto enrolment, why not download our free introductory guide?