THE INSURANCE industry has spoken out against the introduction of a cap on fees that pension providers can charge, warning it will squeeze providers at a time when they are being asked to stump up extra cash.
Pensions minister Steve Webb announced the cap will be set at 0.75 per cent for those in auto-enrolment schemes from April 2015. The 0.75 per cent option is the toughest of three different caps considered and is expected to save the taxpayer £200m over the next 10 years.
Speaking yesterday Webb said: “We are going to put charges in a vice; and we will tighten the pressure year after year.” He added that from April 2016 pension providers will be banned from taking money from schemes to pay sales commission and active member discounts will end.
Industry leaders warned the cap would put pressure on some smaller schemes. Neil Carberry, director for employment and skills at the CBI said: “We do not think capping fees at this level is wise, especially as schemes will now have to provide expensive advice following last week’s Budget.”