Pension Charges Cap in 2015

Pension Charges Cap in 2015.

Pensions Minister, Steve Webb, has confirmed that pension companies will be blocked from making excessive pension charges from 2015.

Currently, pension companies levy annual management charges and administration charges on pensions ranging from around 0.3% pa (for a good pension scheme) up to on average 1.0% pa and sometimes over 2% pa for sophisticated funds.

The impact on this is that your pension fund must grow by say 2% per year just to stand still and get no growth.

The Government has been reviewing pension charges for some time and the threat of a pension charges cap has been on its agenda.

The new charges cap of 0.75% pa will apply to workplace pensions only.  These are the new schemes that all employers are being forced, by law, to set up for their employees.

Comment

Ever since this website and firm started trading, we have lobbied for lowered charges on pensions.  We have warned you, as consumers, to pay for fee only advice and not have excessive charges drawn from pension funds.  We see this 0.75% pa cap as the first ‘shoot’ that will grow across the whole financial services industry to reduce pension and investment charges so that clients get a better deal for their money.

Very soon you will see improved growth returns on investments but this do not mean your old pensions or investments will attract the newer lower charges.  We suggest you contact us for professional advice to ensure that your investments are charged at the lowest rate you can secure so that more of your hard earned money stays in your pocket.