From April 2022 The Department for Work and Pensions (DWP) is planning to change the way workplace scheme members are charged and are looking at banning flat fees where pension pots are worth £100 or less.
The plan aims to boost the value for money for scheme members.
The Government is also considering mandating universal charging structures to make it easier for people to compare workplace pensions. In addition, the DWP is looking to find out whether employers would agree to match contributions if an employee chooses another pension scheme rather than teh workplace pension.
The DWP is looking to protect people’s pensions and the reputation of the government's flagship workplace pension reforms. The £100 threshold is simpler than a tiered approach.
On the choice to use your own preferred pension (if the employer will contribute) will simplify matters for people saving for retirement and improve the ability to engage with their pension. By offering auto-enroled employees a wider choice with employee and employer contribution would mean greater choice and may increase engagement as well as increase competition which will likely force charges down further.