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Eversheds comment: Delay in UK pension charges cap will allow time to get it right

  • United Kingdom

    17-01-2014

    In October 2013, the UK Department for Work and Pensions (DWP) published a consultation paper setting out proposals to cap the charges levied by default funds under qualifying defined contribution (DC) auto-enrolment schemes. The intention was for this cap to be in place by April 2014. However, the DWP has now confirmed that implementation will be delayed for at least a year.

    Commenting on this development, Francois Barker, head of pensions at global law firm Eversheds, says:

    "The government’s original plan to impose a cap on DC default fund charges by April 2014 was ambitious in terms of timescale. Rather than rushing through legislation, delaying implementation will hopefully give the government time to consider the detail and get it right.

    “It is important that people have a decent level of savings for their retirement. However, low charges alone will not guarantee this. It is also essential that pension schemes have effective governance, clear communications and suitable investment options. And, of course, low charges will not greatly improve the funds available for a person’s retirement if the amount of money paid into their pension is insignificant in the first place."

    Eversheds' Automatic Enrolment Compliance Tool

    Francois Barker, Product Group Head

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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