THE BLOG
30/12/2013 10:05 GMT | Updated 26/02/2014 05:59 GMT

No Room for Rip-Off Pension Schemes in the Workplace

The Regulatory Policy Committee's recent response to the Department of Work and Pensions' (DWP) Impact Assessment on a pension charge cap is disappointing, and seems to be more concerned about the impact on pension companies' profits than the potential benefits to consumers.

Which? has submitted a response to DWP's consultation supporting the introduction of the cap and calling for it to be set at 0.5% to improve minimum standards for workplace pensions.

The charge cap will mean a shift in business from less efficient providers, who cannot meet the cap, to more efficient providers who can. It would also have significant monetary benefits for consumers - saving them £7.2 billion over the next 10 years if the cap is set at 0.5%.

While we agree that regulatory decisions must be accompanied by a thorough evaluation of both the costs and the benefits, people need to be confident that their money is being well looked after, not lining the pockets of a fund manager.

Campaigning for fairer pensions does work. Which? has previously called for an end to consultancy charges on auto-enrolment pension schemes.

In January 2013, we wrote to the Department of Work and Pensions, the Financial Conduct Authority and the Pensions Regulator, and as a result, in May this year, the Government announced a ban on charges for auto-enrolment schemes.

That was a good start. But there is still a long way to go to make sure this market works in the best interest of savers.

With consumers being squeezed by the rising cost of living, there is no room for rip-off pension schemes in the workplace.

We hope the Government will keep their focus on ensuring consumers, and not pension companies' profits, are at the heart of their proposals.