UK’s Financial Conduct Authority (FCA) published final rules for charges in workplace pension schemes applicable from 6 April 2015.
This step is considered advantageous for savers, as the decision requires firms operating workplace pension schemes to implement a 0.75 % charge cap for automatic enrolment funds.
Under the new rules, all employers are obliged to automatically enrol eligible workers into a pension scheme into which both the employee and the company make payments. Employees not actively choosing a fund in which to invest their money will be put into the scheme’s “default” fund for which the 0,75 % charge cap applies.
Christopher Woolard, the FCA’s Director of Strategy and Competition, said that the new rules are preventing firms from paying or receiving consultancy charges and paying commission for advice not expressly agreed by scheme members. The new regime ensures that savers not playing an active role in deciding where their money is invested get value for their money.
However, the British government is still under pressure to cut the maximum fee to 0.5% as UK’s stakeholders described the cap as a “blunt tool” at a time when competition is already driving charges down below the 0.75% level and believed that 0.5% would be a more realistic cap as the average charge on new pension schemes was 0.51% already in 2012.
Please read the full article here.