Cap on charges lowered for some UK pensions

Britons savings could be boosted by 8 pct

LONDON, Feb 25, (RTRS): Britons with private pensions that are part of an industry benchmark could see their final savings boosted by up to 8 percent after the amount of fees and charges levied on their pension pots was capped at 0.75 percent a year.

The Pension Quality Mark (PQM), which has over 170 pension schemes covering more than 300,000 members, has lowered its cap on annual charges and fees from 1 percent of the total value of an individuals’ pension pot, the National Association of Pension Funds (NAPF) said on Monday.

Private pension firms have been accused of failing to disclose some of the costs they levy on customers’ investment funds, leaving people unaware that their pension savings were being eroded by the fees.

The average annual management charge on a workplace pension scheme is 0.77 percent, according to the Association of British Insurers (ABI).

So-called defined contribution pension schemes, which offer less certainty for employees than schemes linked to their salaries, have become the norm for many workers as UK employers seek to reduce their exposure to costly salary-related schemes.

The government-backed “auto-enrolment” initiative is also expected to add up to 11 million extra people into workplace pension schemes - the vast majority being defined contribution plans.

Government and industry watchdogs have been