‘Job hoppers’ hit with rip-off pension fees
HUNDREDS of thousands of young “job hoppers” are being charged rip-off pension fees on money saved under the Government’s flagship retirement saving scheme.
Analysis reveals that Now Pensions, one of the UK’S biggest auto-enrolment providers, is using a loophole to force workers with small funds to subsidise smaller fees for high earners with large sums saved. It means workers who build up funds worth less than £1,800 before moving to another company are being charged fees which exceed the Government’s official charge cap.
Baroness Altmann, the former pensions minister, sharply criticised the Government and Now Pensions over the charges.
She said: “Companies have been able to get away with these different charging structures that bamboozle customers. Regulators and the Government must make a change in customers’ interest – they should only allow a single charge.”
Nearly every worker in the UK is enrolled into a company pension under the so-called “auto-enrolment” scheme, first introduced in 2012 to encourage millions of people to save into pensions for the first time.
Analysis of Now Pensions’ charges show its fee structure penalises workers who build up smaller pots to such an extent that in the worst cases their fund is guaranteed to fall to zero before they reach retirement.
Unlike other major providers, Now Pensions charges a 0.3pc annual management charge as well as a flat £1.50 or 30p per month “administration fee”.
Now Pensions provides workplace savings plans for around 1.25 million employees at a number of big companies including Fitness First, P& O, and Cineworld.
But it insisted the analysis was “unrepresentative” of its membership and said the charging structure was “deliberate” to avoid savers with larger pots subsidising the smaller pensions of people who have stopped saving.