29 October 2013
In today’s Pensions Bill debate, Steve Webb anounced his ‘full frontal assault’ on pension charges. Here are my thoughts:
It is of course right that people need good value pension schemes to save into with auto enrolment, but it is also important that we consider the losses they can sustain when buying an annuity. Buying the wrong annuity can be even more damaging to people’s pension funds than being in a higher charging scheme. There are no controls on the rates annuity providers can offer nor on those charges levied for buying the annuity either.
In addition, the Governments own NEST scheme established at taxpayers expense, also needs to reform its huge 1.8% initial fee. For older workers auto enrolled into NEST the fees can be over 2%. Reforming NESTs charges should be an important part of these charge cap reforms.